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Monitoring and Analysis of Contingent Budget Liabilities to Financial System

Author

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  • Igor V. Belyakov

    (Economic Expert Group, Moscow 109012, Russia; Financial Research Institute, Moscow 127006, Russia)

Abstract

The last global financial crisis has demonstrated that when contingent budget liabilities risks materialize, the resulted budget losses can be huge even in advanced economies. Thus, the importance of the topic raised due to the need to mitigate these risks. On the other hand, monitoring and analysis of contingent budget liabilities are necessary for reliability of budget forecast, which is the basis for the future budget policy. The recent surveys of the OECD (2014) and the IMF (2016) have revealed that monitoring and analysis of the budget risks of contingent liabilities generally are not well-organized in most of countries. Nevertheless, it is possible to formulate several verified recommendations and point out some of the best practices in this field. These include regular and comprehensive reporting on budget risks, application of stress-testing and probability approach, and also calculation of quantitative indicators that measure implicit budget liabilities. As an illustration, two of such indicators, based on the Russian data for 2012–2016, are calculated and considered in the article.

Suggested Citation

  • Igor V. Belyakov, 2017. "Monitoring and Analysis of Contingent Budget Liabilities to Financial System," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 4, pages 71-84, August.
    • Handle: RePEc:fru:finjrn:170406:p:71-84
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    References listed on IDEAS

    as
    1. Ricardo Correa & Horacio Sapriza, 2014. "Sovereign Debt Crises," International Finance Discussion Papers 1104, Board of Governors of the Federal Reserve System (U.S.).
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    3. 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.
    4. Carmen M. Reinhart & Kenneth S. Rogoff, 2015. "Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(4), pages 5-17, June.
    5. Andreas Jobst & Mr. Dale F Gray, 2013. "Systemic Contingent Claims Analysis: Estimating Market-Implied Systemic Risk," IMF Working Papers 2013/054, International Monetary Fund.
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    7. Timothy C. Irwin, 2016. "Getting the Dog to Bark: Disclosing Fiscal Risks from the Financial Sector," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 1-17, June.
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    Cited by:

    1. Antonina S. Kovalevskaya & Svetlana I. Nikulina, 2018. "Government Guarantees as an Instrument for Investment Risk Allocation," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 5, pages 23-33, October.

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    More about this item

    Keywords

    budget risks; contingent liabilities; financial system; banking crisis;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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