Disclosing Fiscal Risks in the Post-Crisis World
IMF Staff Position Notes, July 16, 2009
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Bibliographic details
- Published: July 16, 2009
- Series: IMF Staff Position Notes
- DOI: https://doi.org/10.5089/9781455241125.004
Summary
- Discusses appropriate methods for disclosing fiscal risks from exogenous shocks and the realization of explicit or implicit contingent obligations of the government.
- Expands on previous guidance prepared prior to the crisis, with a focus on fiscal risks emerging from recent public interventions in the financial sector.
- Argues that information on fiscal risks and its public reporting leads to a better understanding of the true state of the public finances, helping policymakers design and get public support for appropriate responses to contingencies.
Fiscal risks from public interventions in the financial sector
- The unfolding global financial crisis prompted a wide range of public sector interventions in support of the financial system.
- Although these interventions were necessary, they have generated further fiscal risks.
- Such interventions create assets and liabilities that governments have taken onto their balance sheets, with implications for future fiscal outturns.
Role of comprehensive reporting
- Comprehensive reporting of fiscal risks would help governments:
- Define a management strategy for the assets and liabilities taken on their balance sheet.
- Prepare exit strategies for reducing their presence in the financial sector and eventually withdrawing support.
- Public disclosure improves understanding of the true fiscal position and helps secure public support for policy responses when contingencies realize.
Policy implications and recommendations (implicit in the note)
- Enhance the disclosure of contingent liabilities and fiscal risks stemming from financial-sector support measures.
- Use forward-looking reporting and fair value assessment approaches to better capture potential fiscal exposures.
- Develop clear asset- and liability-management strategies tied to publicly disclosed exit plans from extraordinary financial-sector interventions.
Subject areas and keywords (as categorized in the publication)
- Subject: Contingent liabilities, Economic sectors, Financial statements, Fiscal policy, Fiscal risks, Public debt, Public financial management (PFM), Public sector
- Keywords: asset price volatility, asset recovery, commercial paper, Contingent liabilities, debt, debt repayment, debt stock, fair value, financial crisis, Financial statements, fiscal risk, Fiscal risks, forward-looking risk estimate, Global, public finance, Public sector, purchased assets, recovery rate, risk, risk ratings approach, SPN
Content in this bundle
- _spn0918 - Executive Summary