lmplicit Pension Debt in the Middle-East and North Africa Magnitude and Fiscal lmplications
AbstractThis paper breaks down the contingent liability of a mandatory pension system into two components: the implicit pension debt and the pay-as-you-go asset. It then estimates these two components for 12 pension schemes across six MENA countries and presents international comparisons. The results show that implicit pension debts are large (in the order of 50% to 100% of GDP), often higher than the explicit public debt. At the same time, the large majority of pension schemes have negative pay-as-you-go assets. Under these circumstances, it is misleading to consider the implicit pension debt a contingency, as the government will have to finance it with almost certainty. In the absence of a default the fiscal impacts are expected to be large. The paper recommends including in the assessment of public debt sustainability the implicit liabilities of the mandatory pension system and the pay-as-you-go asset.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 12019.
Date of creation: Sep 2006
Date of revision:
Pensions; implicit pension debt; fiscal policy; contingent liabilities;
Other versions of this item:
- Robalino, David & Bogomolova, Tatyana, 2006. "lmplicit Pension Debt in the Middle-East and North Africa: Magnitude and Fiscal lmplications," MPRA Paper 12016, University Library of Munich, Germany.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Reinhart, Carmen & Rogoff, Kenneth & Savastano, Miguel, 2003.
13932, University Library of Munich, Germany.
- Robalino, David & Whitehouse, Edward & Mataoanu, Anca & Musalem, Alberto & Sherwood, Elisabeth & Sluchynsky, Oleksiy, 2005.
"Pensions in the Middle East and North Africa: time for change,"
10448, University Library of Munich, Germany.
- David Robalino, 2005. "Pensions in the Middle East and North Africa: Time for Change," World Bank Publications, The World Bank, number 7427, September.
- Holzmann, Robert & Palacios, Robert & Zviniene, Asta, 2004. "Implicit pension debt: issues, measurement and scope in international perspective," Social Protection Discussion Papers 30153, The World Bank.
- Gilbert,Christopher L. & Vines,David (ed.), 2000. "The World Bank," Cambridge Books, Cambridge University Press, number 9780521790956.
- Robalino, David A. & Bodor, András, 2009.
"On the financial sustainability of earnings-related pension schemes with ‘pay-as-you-go’ financing and the role of government-indexed bonds,"
Journal of Pension Economics and Finance,
Cambridge University Press, vol. 8(02), pages 153-187, April.
- Robalino, David A. & Bodor, Andras, 2006. "On the financial sustainability of earnings-related pension schemes with"pay-as-you-go"financing and the role of government indexed bonds," Policy Research Working Paper Series 3966, The World Bank.
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