2. 60
70
80
90
100
110
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Advanced Economies: Public Debt
(2007-2016, Percent of GDP)
Source: Fiscal Monitor Database and staff estimates.
Spring 2007
Spring 2016
37% of GDP
I. Why Fiscal Risks Matter:
Public Debt Forecasts for Advanced Economies
2

3. Fiscal Costs of Contingent Liabilities
(Percent of GDP)
Bova, E., M. Ruiz-Arranz, F. Toscani, and H. E. Ture, 2016, “The Fiscal Costs of Contingent Liabilities: A
New Dataset,” IMF Working Paper 16/14 (Washington: International Monetary Fund).
I. Why Fiscal Risks Matter:
Cost of Contingent Liabilities
3

4. II. Fiscal Risk Assessment Tools
Fiscal Transparency Evaluation
AUTBEL
CYP
EST
FIN
FRA
DEU
GRC
IRL
ITA
LVA
LTU
LUX
MLTNLD
PRT
SVKSVN
ESP
0
2
4
6
8
10
12
14
0 2 4 6 8 10 12 14
Revenuegrowth
Nominal GDP growth
0
50
100
150
200
250
300
Portugal
Ireland
Romania
Russia
Uzbekistan
Tunisia
Albania
Brazil
Turkey
UK
Austria
Finland
Philippines
Peru
Georgia
Mozambique
Lithuania
Macedonia
Mexico
Kenya
Tanzania
Explicit Public Corp Liabilities
Contingent Liabilities
(Percent of GDP)
Macro-fiscal Volatility
(St deviation)
4

5. AUT
BEL
CYPCZE
DNK
FIN
FRA
DEU
IRL
ISR
ITA
LVA
LTU
LUX
MLT
NLD
NOR
PRT
SVK
SVN
ESP
SWE
CHE
GBR
0
2
4
6
8
10
12
14
16
0 20 40 60 80 100 120 140
AverageMaturityofDebtinyears
Debt as a percentage ofGDP
0
10
20
30
40
50
60
70
80
Sweden
France
Denmark
Belgium
UK
Netherlands
Finland
Norway
Germany
Austria
Luxemburg
Croatia
Ireland
Malta
Spain
Hungary
Italy
Estonia
Slovenia
Czech…
Romania
Cyprus
Portugal
Bulgaria
Greece
Lithuania
Latvia
Slovakia
Poland
Increase 2016 - 2060
2060
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
Azerbaijan
Ireland
Netherlands
Belgium
Russia
Spain
CzechRepublic
Germany
Greece
Denmark
France
SlovakRepublic
Turkey
Lithuania
UK
Austria
Croatia
Poland
Romania
Sweden
Switzerland
Georgia
Bulgaria
Italy
Portugal
0
5
10
15
20
25
30
35
40
45
0 10 20 30 40
Exchange rate volatilityForexGGdebt(percentofGDP
ARM
GEO
HUN
AZB
PAKBUL
ROM
TUR
RUS
ISR
UK AUS
Disasters: Avg Annual Damages
(Percent of GDP)
II. Fiscal Risk Assessment Tools
FTE Findings: Disasters, Demographics and Debt
Demographics: Old age dependency ratio
(65+ to working age popn)
Debt: Rollover risk
(avg maturity and size)
Debt: Exchange Rate Risk
(forex debt to erate volatility)
5

6. II. Fiscal Risk Assessment Tools
Balance Sheet Assessment
General
Government
Non-Financial
Public Corps
Financial
Public Corps Public Sector Consolidation
Total assets 114.4 16.3 33.9 140.8 -23.8
Nonfinancial assets 45.5 13.2 0.1 58.8 0.0
Financial assets 68.9 3.1 33.8 81.9 -23.8
Monetary gold and SDRs 0.0 0.0 0.5 0.5 0.0
Currency and deposits 5.1 0.3 0.9 5.3 -1.0
Debt securities 7.7 0.7 22.2 24.6 -5.9
Loans 11.8 0.2 8.1 14.3 -5.9
Equity and investment fund shares 31.2 0.6 1.0 21.8 -11.0
Insurance, pensions and guarantees 0.0 0.0 0.0 0.0 0.0
Financial derivatives 0.0 0.0 0.0 0.0 0.0
Other accounts receivable 13.1 1.3 1.2 15.5 0.0
Liabilities 114.6 16.3 33.9 141.0 -23.8
SDRs 0.0 0.0 0.0 0.0 0.0
Currency and deposits 0.3 0.0 6.8 6.1 -1.0
Debt securities 75.5 4.4 13.9 87.9 -5.9
Loans 3.3 2.6 3.2 3.3 -5.9
Equity and investment fund shares 0.0 8.4 8.8 6.2 -11.0
Insurance, pensions and guarantees 17.0 0.0 0.0 17.0 0.0
Pension entitlements 12.5 0.0 0.0 12.5 0.0
Claims of pension fund 4.5 0.0 0.0 4.5 0.0
Other 0.0 0.0 0.0 0.0 0.0
Fianncial derivatives 0.0 0.0 0.0 0.0 0.0
Other accounts payable 18.4 0.9 1.2 20.5 0.0
NET FINANCIAL WORTH -45.7 -13.2 -0.1 -59.1 -
NET WORTH -0.2 0.0 0.0 -0.2 -
Revenue 39.8 6.1 1.3 45.2 2
Expense 40.2 6.1 1.3 45.6 2
Net investment in nonfinancial assets 0.6 0.3 0.0 0.9 0
Net lending/borrowing -1.0 -0.3 0.0 -1.3 0
Canada Public Sector Statement of Operations
Canada 2016 Public Sector Balance Sheet
(Percent of GDP)
-250 -150 -50 50 150 250 350 450
NOR
BTN------
JPN
FIN------
FSM 1
CZE------
SWE
KOR------
ROM
HUN------
LUX
KAZ------
SVN
AUT------
HRV
AUS------
PRT
SMR------
ISL
NZL------
LVA
ZAF------
MWI 1
GEO------
EST
FRA------
USA
CAN------
CYP
DNK-------
BGR
NLD------
ESP
ALB------
MDA
MHL 1------
GRC
DEU-------
ITA
HKG------
RUS
LTU------
COL
GBR------
URY
CHE------
PER
SVK-----
KGZ
PLW 1------
BEL
UKR------
POL
IRL------
SRB 1
BRB 1------
BRA
IDN------
GMB
TUR------
SLV
IND 1-------
Total risk-adjusted assets
Total risk-adjusted liabilities
Total assets
Liabilities
Risk Adjusted Assets and Liabilities
(Percent of GDP)
6

7. II. Fiscal Risk Assessment Tools
Fiscal Stress Tests - Iceland
0
10
20
30
40
50
60
70
80
90
100
2006 2011 2016 2021
Baseline
Macro Only
Stress: Macro + CL
-5
0
5
10
15
20
25
30
2016 2017 2018 2019 2020 2021
Baseline
Stress
Baseline Shock
Financial assets 903.5 811.1
Currency and deposits 9.2 9.0
Loans 8.5 8.4
Shares and other equities 17.9 9.0
Other accounts receivable 7.0 7.0
NPV Revenues 860.2 777.0
Liabilities 942.9 918.6
Securities other than shares 21.8 42.8
Loans 20.4 27.3
Insurance technical reserves 18.0 18.1
Other accounts payable 7.4 7.4
NPV Expenditures 875.3 823.0
Net Financial Worth -39.4 -107.6
Existing Net Financial Worth -24.3 -61.6
Future discounted deficits -15.1 -46.0
Public Debt
(Percent of GDP)
Liquidity: Gross Financing
(Percent of GDP)
Solvency: Comprehensive Balance Sheet
(Percent of GDP)
7

8. The Gambia: SOE projections
(Percent of GDP)
II. Fiscal Risk Assessment Tools
SOE Health Scan
Electricity Company with reforms
TelecommunicationPort Authority
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
LLC"Marabda-KartsakhiRailway"
JSC"GeorgianRailway"
JSC"GeorgianState
Electrosystem"
JSC"GeorgianOilandGas
Corporation"
EnergoTrans
LLC"UnitedWaterSupply
CompanyofGeorgia"
Ltd.Engurhesi
Ltd."StateConstruction
Company"
LLC"Mechanic"
LLC"GeorgianGasTransportation
Company"
JSC"ElectricitySystem
CommercialOperator"
Anothermediumriskandlow-risk
OtherHighrisk
Medium and Low RiskHigh risk
SOEs
Financial Risk Rating: Georgia SOEs
8

9. Impact on Government Deficit (accrual and cash)
Impact on Government Gross Debt…. … and contingent liabilities
Assessment of project fiscal risks
II. Fiscal Risk Assessment Tools
PPP Fiscal Risk Assessment Model

10. III. Fiscal Risk Management Toolkit
• Cap Exposure
• Regulate
• Transfer
STEP 2: MITIGATE
• Expense
• Budget contingencies
• Buffer funds
STEP 3: PROVISION
• Account for in setting fiscal objectives
STEP 4: ACCOMMODATE
RESIDUAL
• Identify risks
• Calculate exposure and likelihood
• Weigh costs and benefits of intervention
STEP 1: IDENTIFY AND
QUANTIFY
10

11. IV. Conclusions
• Fiscal risks can be large, with major implications for fiscal policy
• Governments need to identify and understand the risks they face
– Fiscal Risk Statement
• IMF tools available to analyze, quantify and assess risks:
– Fiscal Transparency Evaluation
– Balance Sheet Assessment and Fiscal Stress Test
– SOE health scan & P-FRAM
• Fiscal Risk Management Toolkit helps identify, mitigate, provide
for and absorb a wide range of different risks
11

12. Key Documents
Fiscal Transparency, Risk and Accountability
Analyzing and Managing Fiscal Risk – Best Practices
Fiscal Transparency (Code, handbook and evaluations)
Fiscal Monitor – Managing Public Wealth
PPP- Fiscal Risk Assessment Model
12

13. 13
FRA DEU NLD ESP PRT GBR USA GRC IRL ISL AVE*
Underlying fiscal position 1.7 3.2 -2.4 1.8 11.3 3.7 8.1 16.3 1.3 10.9 6.0
Revisions to 2007 deficit & debt 1.7 1.8 -0.9 -0.1 0.1 1.5 7.1 2.5 1.6 4.0 4.7
Changes to government boundary -0.7 1.4 -0.2 0.6 9.4 1.9 0.9 11.2 -0.1 2.5 1.1
Cash-accrual adjustments 0.7 0.0 -1.3 1.3 1.7 0.3 0.0 2.6 -0.2 4.5 0.2
Exogenous shocks 8.4 12.8 14.2 15.4 8.1 17.0 6.3 40.0 60.2 39.5 9.8
Macroeconomic shocks 8.3 4.7 5.2 13.0 4.4 8.9 3.8 38.4 35.7 -3.3 6.0
Financial sector interventions 0.0 8.1 9.0 2.5 3.6 8.1 2.5 1.6 24.5 42.8 3.8
Policy changes 2.3 3.8 1.9 4.9 4.7 1.1 6.4 -8.0 -9.9 -4.3 4.7
Other factors 2.1 -0.3 6.5 1.9 3.7 6.2 8.3 -6.7 7.5 21.6 5.9
Total Unforecast Increase in Debt 14.4 19.5 20.2 24.0 27.8 28.0 29.1 41.7 59.1 67.7 26.4
* GDP-weighted average
Sources of Unexpected Increase in General Government Debt
(percent of GDP, 2007-2010)
Unreported
Deficits
SoEs &
PPPs
Arrears
Macroecono
mic Risks
Contingent
Liabilities
Stimulus /
Consolidatio
n
Issues Revealed
by the Crisis
I. What are Fiscal Risks?
Sources of Fiscal Risks: Global Financial Crisis

14. 14
AUT
BEL
CYPCZE
DNK
FIN
FRA
DEU
IRL
ISR
ITA
LVA
LTU
LUX
MLT
NLD
NOR
PRT
SVK
SVN
ESP
SWE
CHE
GBR
0
2
4
6
8
10
12
14
16
0 20 40 60 80 100 120 140
AverageMaturityofDebtinyears
Debt as a percentage ofGDP
0
10
20
30
40
50
60
70
80
Sweden
France
Denmark
Belgium
UK
Netherlands
Finland
Norway
Germany
Austria
Luxemburg
Croatia
Ireland
Malta
Spain
Hungary
Italy
Estonia
Slovenia
Czech…
Romania
Cyprus
Portugal
Bulgaria
Greece
Lithuania
Latvia
Slovakia
Poland
Increase 2016 - 2060
2060
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
Azerbaijan
Ireland
Netherlands
Belgium
Russia
Spain
CzechRepublic
Germany
Greece
Denmark
France
SlovakRepublic
Turkey
Lithuania
UK
Austria
Croatia
Poland
Romania
Sweden
Switzerland
Georgia
Bulgaria
Italy
Portugal
0
5
10
15
20
25
30
35
40
45
0 10 20 30 40
Exchange rate volatilityForexGGdebt(percentofGDP
ARM
GEO
HUN
AZB
PAKBUL
ROM
TUR
RUS
ISR
UK AUS
Disasters: Avg Annual Damages
(Percent of GDP)
III. Fiscal Risk Assessment Tools
FTE Findings: Disasters, Demographics and Debt
Demographics: Old age dependency ratio
(65+ to working age popn)
Debt: Rollover risk
(avg maturity and size)
Debt: Exchange Rate Risk
(forex debt to erate volatility)

15. 15
III. Fiscal Risk Management Toolkit