## How to Assess Fiscal Risks from State-Owned Enterprises: Benchmarking and Stress Testing

_IMF How To Notes, August 19, 2021_

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## Bibliographic details
- Authors: Anja Baum, Paulo A Medas, Alberto Soler, Mouhamadou Sy
- Published: August 19, 2021
- Series: IMF How To Notes
- DOI: https://doi.org/10.5089/9781513591186.061

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### Summary and main findings
- The size and operation of state-owned enterprises (SOEs) can imply significant risks for governments.
- SOEs are present in virtually every country and are major players in domestic economies and global markets.
- In some countries, SOEs number in the thousands and are owned by national or subnational governments.
- SOEs are among the largest corporations in some advanced economies and comprise a third or more of the largest firms in several emerging markets.
- Many SOEs operate with systematic losses and carry significant liabilities.
- If SOEs face adverse shocks and financial distress they can impact the government budget or balance sheet through numerous transmission channels.

### Purpose and policy relevance
- Describes a newly developed SOE risk assessment tool to help country authorities and IMF country teams.
- Analysis can provide inputs for annual budgets and medium-term fiscal planning.
- Outputs include estimates of possible transfers to and from SOEs to the budget and possible financing needs.

### Analytical approach and key steps
- Step 1: Collect financial information on SOEs and their relation to the government budget, and provide a benchmark against other SOEs in similar sectors.
- Step 2: Undertake a forward-looking analysis based on baseline forecasts and stress scenarios, to identify and analyze possible risks and their impact on government accounts.
- The tool combines benchmarking of SOE financials (performance indicators, operating cash flow, current liabilities) with stress testing (stress scenario, stress testing) to assess fiscal risks.

### Intended users and applications
- Country authorities responsible for public enterprises and public financial management (PFM).
- IMF country teams assessing fiscal risks and compiling inputs for fiscal planning.
- Use cases: informing annual budgets, medium-term fiscal frameworks, and identifying potential contingent liabilities and financing needs.

### Subjects and keywords (as listed)
- Subjects: Currencies; Economic sectors; Financial crises; Financial sector policy and analysis; Financial statements; Fiscal risks; Money; Public enterprises; Public financial management (PFM); Stress testing.
- Keywords: Currencies; current liabilities; Financial statements; Fiscal Affairs Department staff; Fiscal risks; Global; operating cash flow; performance indictor; Public enterprises; SOE financials; stress scenario; Stress testing.

### Publication and metadata
- Authors: Anja Baum, Paulo A Medas, Alberto Soler, Mouhamadou Sy
- Publication date: August 19, 2021
- Format: IMF How To Notes 2021, 009 (2021)
- Pages: 27
- Volume: 2021
- Issue: 009
- Series: How-To Note No 2021/009
- DOI: https://doi.org/10.5089/9781513591186.061
- Stock No: HTNEA2021009
- ISBN: 9781513591186
- ISSN: 2522-7912

*How to Assess Fiscal Risks from State-Owned Enterprises: Benchmarking and Stress Testing, IMF How To Notes (2021/009).*

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_Source: https://www.imf.org/en/publications/fiscal-affairs-department-how-to-notes/issues/2021/08/18/how-to-assess-fiscal-risks-from-state-owned-enterprises-463616_