Government Expenditure Arrears: Securitization and Other Solutions
May 1, 1998
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Summary
On occasions, by running arrears, governments have unilaterally borrowed from domestic agents. These agents ended up with implicit claims on the government for which they had no title and that would be honored, at best, on an unspecified future date and for an uncertain value. Having untitled assets limits creditors’ financial management capacity, because they cannot trade or enforce these claims. This paper presents several options for addressing the arrears problem. It recommends that the government recognize its implicit financial liabilities, set a timetable for their clearance, and issue market-negotiable titles (securitize). Several country experiences with securitization operations are documented.
Subject: Arrears, Currencies, External debt, Financial institutions, Money, Securities, Stocks, Treasury bills and bonds
Keywords: aggregate demand, Arrears, arrears problem, Baltics, BRO countries, cash budget, Currencies, debt service, government arrears, immediate payment, payment arrears, Russia, Securities, Securitization, securitization operation, Stocks, Treasury bill holder, Treasury bills and bonds, WP
Pages:
29
Volume:
1998
DOI:
Issue:
070
Series:
Working Paper No. 1998/070
Stock No:
WPIEA0701998
ISBN:
9781451849127
ISSN:
1018-5941
