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Sovereign credit guarantees and government on-lending can catalyze private sector investment and fulfill specific policy objectives. However, contingent liabilities stemming from guarantees and contingent assets stemming from on-lending expose governments to risk. Prudent risk management, including risk analysis and measurement, can help identify and mitigate these risks. This paper proposes a four-step structure for analyzing and measuring credit risk: (i) defining key characteristics to determine the choice of a risk analysis approach; (ii) analyzing risk drivers; (iii) quantifying risks; and (iv) applying risk analyses and quantification to the design of risk management tools. This structure is based on an assessment of approaches discussed in academia and applied in practice. The paper demonstrates how the four steps of credit risk management are applied in Colombia, Sweden, and Turkey. It also discusses how the proposed framework is applied in Indonesia as it develops a credit risk management framework for sovereign guarantees. Country experiences show that although sovereign risk managers can draw on insights from credit risk management in the private sector, academic literature, and practices in other countries, approaches to risk management need to be highly context-specific. Key differentiating factors include characteristics of the guarantee and on-lending portfolio, the sovereign's specific risk exposure, the availability of market information and data, and resources and capacity in the public sector. Developing a sound risk analysis and measurement framework requires significant investments in resources, capacity building, and time. Governments should view this process as iterative and long-term.

Access to Finance --- Bankruptcy and Resolution of Financial Distress --- Banks and Banking Reform --- Contingent Liabilities --- Credit Risk --- Debt Markets --- Finance and Financial Sector Development --- Fiscal Risks --- Guarantees --- Insurance & Risk Mitigation --- Onlending --- Public Debt Management --- Risk Management

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Tax considerations are seldom the determining factor in deciding whether to purchase a business. However, taxes often affect the price and form (e.g., purchase of stock or purchase of assets) the acquisition takes. This is true because the rationally determined price will be based on the expected present value of after-tax future cash flows. The tax component of the equation will depend on the form the acquisition takes. From the seller's perspective, tax considerations are extremely important. The tax implications of the purchase and sale of a business depend largely upon who is the buyer and who is the seller and what is being bought and sold. The business being purchased may be an unincorporated proprietorship, a single owner limited liability company (LLC), a partnership (or an LLC with more than one member), a C corporation, or an S corporation. The form of the sale (asset or stock) affects the character of the seller's gain (ordinary or capital) and the buyer's basis of the assets. Basis becomes the buyer's future tax deductions. Just as the price the buyer is willing to pay is based on projected present value of the after-tax proceeds, the price that is acceptable to the seller will depend upon his or her expected after-tax proceeds. Both parties must be aware of the other party's tax consequences to achieve a rational agreement.

Business enterprises --- Purchasing --- Taxation --- United States. --- applicable federal rate (AFR) --- contingent liabilities --- contract price --- cost recovery period --- covenant to not compute --- depreciation recapture --- goodwill --- gross profit ratio --- installment sale --- limited liability company (LLC) --- section 197 intangible assets --- tax basis --- tax lives --- qualified indebtedness

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Deferred tax --- Business enterprises --- Business finance --- Business financial management --- Financial analysis of business enterprises --- Financial management, Business --- Financial management of business enterprises --- Financial planning of business enterprises --- Managerial finance --- Deferral of taxation --- Deferred income tax --- Tax, Deferred --- Tax debits --- Tax deferral --- Liabilities (Accounting) --- Tax accounting --- Tax shelters --- Accounting --- Finance --- E-books --- Taxation --- Economic aspects. --- Duties --- Fee system (Taxation) --- Tax policy --- Tax reform --- Taxation, Incidence of --- Taxes --- Finance, Public --- Revenue

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Many studies have highlighted how failures of public corporations (otherwise known as state-owned enterprises) can result in huge economic and fiscal costs. To contain the risks associated with these costs, an effective regime for the financial supervision and oversight of public corporations should be put in place. This note discusses the legal, institutional, and procedural arrangements that governments need to oversee the financial operations of their public corporations, ensure accountability for their performance, and manage the fiscal risks they present. In particular, it recommends that governments should focus their surveillance on public corporations that are large in relation to the economy, create fiscal risks, are not profitable, are unstable financially, or are heavily dependent on government subsidies or guarantees.

Aggregate Human Capital --- Aggregate Labor Productivity --- Banking --- Banks and Banking --- Banks and banking, Central --- Business enterprises --- Central Banks and Their Policies --- Central banks --- Contingent liabilities --- Corporate Finance --- Economic sectors --- Economic theory --- Employment --- Financial Institutions and Services: General --- Fiscal policy --- Fiscal risks --- Income economics --- Intergenerational Income Distribution --- Labor --- Labour --- Ownership & organization of enterprises --- Public Administration --- Public employment --- Public finance & taxation --- Public Finance --- Public financial management (PFM) --- Public Sector Accounting and Audits --- Quasi-fiscal operations --- Unemployment --- Wages --- South Africa

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What explains public debt spikes since the end of WWII? To answer this question, this paper identifies 179 debt spike episodes from 1945 to 2014 across advanced and developing countries. We find that debt spikes are not rare events and their probability increases with time. We then show that large public debt spikes are neither driven by high primary deficits nor by output declines but instead by sizable stock-flow adjustments (SFAs). We also find that SFAs are poorly forecasted, which can affect debt sustainability analyses, and are associated with a higher probability of suffering non-declining debt paths in the aftermath of public debt spikes.

Debts, Public. --- Economic forecasting. --- Stock-flow analysis. --- Analysis, Stock-flow --- Models, Stock-flow --- Stock-flow models --- Econometric models --- Economics --- Forecasting --- Economic indicators --- Debts, Government --- Government debts --- National debts --- Public debt --- Public debts --- Sovereign debt --- Debt --- Bonds --- Deficit financing --- Exports and Imports --- Inflation --- Public Finance --- National Budget, Deficit, and Debt: General --- Debt Management --- Sovereign Debt --- International Lending and Debt Problems --- Public Administration --- Public Sector Accounting and Audits --- Price Level --- Deflation --- Public finance & taxation --- International economics --- Macroeconomics --- Debt sustainability analysis --- Contingent liabilities --- Government debt management --- External debt --- Public financial management (PFM) --- Prices --- Debts, Public --- Debts, External --- Fiscal policy --- Hungary