Contingent liabilities: monitoring exposures that are difficult to measure

A government's most important contingent liabilities are usually the liabilities of banks, subnational governments, state-owned enterprises, and other entities that benefit from explicit or implicit government guarantees. Data on these liabilities can be used to track the gross amount of the government's possible contingent liabilities; construct broad measures of public debt that effectively treat many contingent liabilities as direct liabilities; and, with other information, derive estimates of the contingent liabilities' expected costs. The size of the contingent liabilities of the governments of Asia's five largest economies - the People's Republic of China, India, Indonesia, Japan, and the Republic of Korea - varies significantly by kind, with those related to public–private partnerships generally being relatively small and those related to banks relatively large, and also by country, with those of Indonesia appearing to be significantly smaller than those of the other four countries. But the cross-country data are patchy and out-of-date, and the international monitoring of debt sustainability would benefit from their improvement.