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Contingent Liabilities: Issues and Practice

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  • Aliona Cebotari

Abstract

Contingent liabilities have gained prominence in the analysis of public finance. Indeed, history is full of episodes in which the financial position of the public sector is substantially altered-or its true nature uncovered-as a result of government bailouts of financial or nonfinancial entities, in both the private and the public sector. The paper discusses theoretical and practical issues raised by contingent liabilities, including the rationale for taking them on, how to safeguard against the fiscal risks associated with them, how to account and budget for them, and how to disclose them. Country experiences are used to illustrate ways these issues are addressed in practice and challenges faced. The paper also points to good practices related to the mitigation, management and disclosure of risks from contingent liabilities.

Suggested Citation

  • Aliona Cebotari, 2008. "Contingent Liabilities: Issues and Practice," IMF Working Papers 2008/245, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2008/245
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    4. Alexander D. Andryakov, 2018. "International Experience and Russian Practice," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 59-70, December.
    5. Emek, Uğur, 2015. "Turkish experience with public private partnerships in infrastructure: Opportunities and challenges," Utilities Policy, Elsevier, vol. 37(C), pages 120-129.
    6. Elva Bova & Marta Ruiz-Arranz & Frederik Giancarlo Toscani & Hatice Elif Ture, 2019. "The impact of contingent liability realizations on public finances," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(2), pages 381-417, April.
    7. Ms. Elva Bova & Marta Ruiz-Arranz & Mr. Frederik G Toscani & H. Elif Ture, 2016. "The Fiscal Costs of Contingent Liabilities: A New Dataset," IMF Working Papers 2016/014, International Monetary Fund.
    8. Agnès Bénassy-Quéré & Guillaume Roussellet, 2014. "Fiscal sustainability in the presence of systemic banks: the case of EU countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(3), pages 436-467, June.
    9. Elsie Addo Awadzi, 2015. "Designing Legal Frameworks for Public Debt Management," IMF Working Papers 2015/147, International Monetary Fund.
    10. Narayan, Laxmi, 2017. "Growth of Public Debt in Haryana – Dynamism or Misplaced Priorities," MPRA Paper 79431, University Library of Munich, Germany, revised 05 May 2017.
    11. Wei Li & Jie Li & Siwei Sun, 2023. "Influence of public credit risk on private capital in public–private partnership models," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1330-1343, March.
    12. Bachmair,Fritz Florian, 2016. "Contingent liabilities risk management : a credit risk analysis framework for sovereign guarantees and on-lending?country experiences from Colombia, Indonesia, Sweden, and Turkey," Policy Research Working Paper Series 7538, The World Bank.
    13. Alaa Soliman & Mohammad Aliu Momoh & Ibrahim L. Awad, 2017. "Infrastructure Guarantees: Making It Simple," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 178-202.
    14. Delorme, Francois, 2014. "Viabilité et vulnérabilité des finances publiques du Québec à moyen terme : une proposition d’un cadre d’analyse et une évaluation [Sustainability and vulnerability of Québec's public finances in t," MPRA Paper 85050, University Library of Munich, Germany.
    15. Mr. Ian Lienert, 2010. "Should Advanced Countries Adopt a Fiscal Responsibility Law?," IMF Working Papers 2010/254, International Monetary Fund.
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    17. World Bank, 2009. "Contingent Liability Risks from State-Owned Enterprises," World Bank Publications - Reports 10543, The World Bank Group.
    18. Ian Lienert, 2013. "Fiscal Responsibility Laws: Are They Needed?," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(03), pages 1-32.

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