Description
The sharp increase in the contingent liabilities of many developing countries in recent years and its possible implications has prompted a rethink in the way governments quantify their financial burdens.
This publication looks at some of the issues germane to the identification, monitoring and valuation of external sector contingent liabilities of India. By focusing mostly on external-sector related contingent liabilities that involve possible financial transactions with non-residents, the document defines a framework for use in quantifying contingent liabilities, which can be adapted to other countries.
This publication is the second in a series produced by the Commonwealth Secretariat on debt and debt related issues.
Contents
Acknowledgements
Foreword
1. Introduction
Background
The scope and structure of the report
2. Definitional and Conceptual Issues
The fiscal risk matrix
External sector contingent liabilities
Contingent liabilities in the emerging economy context
Public contingent liabilities in private infrastructure projects
Independent Power Projects (IPP) and government guarantees
A framework for monitoring contingent liabilities
The valuation of contingent liabilities
3. Country Experiences when Dealing with Contingent Liabilities
The key findings of country practices with regard to contingent liability management
Issues relating to the definition of contingent liabilities
The legal regime
Accounting
Recording, monitoring and management
4. Contingent Liabilities Relating to the Government of India’s Guarantees on External Debt
The classification and magnitude of contingent liabilities
The magnitude of government guarantees on external debt
External debt guarantees by economic sector
Projected debt service payments on government-guaranteed external debt
Government policy towards guarantees
The impact of government guarantees: some empirical advice
The risk of default on government-guaranteed external debt
Contingent liabilities due to the exchange risk guarantee
5. Contingent Liabilities Relating to Infrastructure Investment
Infrastructure investment in India
The government of India’s counter-guarantees for Independent Power Projects
BOT projects on roads in India
Contingent liabilities for telecommunications
Contingent liabilities for ports
Overall recommendations
6. Contingent Liabilities Relating to Banking, Financial Institutions and the Corporate Sectors of India
The banking system
Financial institutions
The corporate sector
7. Concluding Observations and Recommendations
Existing contingent liabilities
New contingent liabilities
List of Boxes
List of Tables
Appendices
Appendix I: An Accounting Framework for Contingent Liabilities
Appendix II: The Special Data Dissemination Standard and the Data Template on International Reserves/Foreign Currency Liquidity
References