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While federal credit programs are varied in form, their fiscal and economic effects arise primarily from the same source—each program’s subsidy component. Recent credit reform proposals would make control of credit subsidies the primary focus of budgetary efforts. By subjecting these subsidies to annual appropriations, the Government would gain more effective means to control the long-run fiscal effects of credit programs. Such reforms also would represent an important first step in improving their economic effects by eliminating unintended subsidies. However, many high subsidy-rate programs appear to have a significant effect on the allocation of credit without yielding clearcut efficiency gains.

Actuarial Studies --- Banks --- Credit --- Depository Institutions --- Finance --- Financial institutions --- Governmental Loans, Loan Guarantees, Credits, and Grants --- Industries: Financial Services --- Insurance & actuarial studies --- Insurance Companies --- Insurance --- Loan guarantees --- Loans --- Micro Finance Institutions --- Monetary economics --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Money and Monetary Policy --- Money --- Mortgages --- United States

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This paper discusses Rwanda’s First Review Under the Policy Coordination Instrument (PCI) and Monetary Policy Consultation. Rwanda’s macroeconomic performance under the program remains strong. The PCI-supported program focuses on creating budget space for the implementation of Rwanda’s National Strategy for Transformation. The program also calls for improving fiscal transparency, boosting revenue, and supporting the implementation of the new interest rate-based monetary policy framework. Looking ahead, the fiscal deficit path is forecasted to adhere to the fiscal rule under the program, which provides space for the implementation of the National Strategy for Transformation (NST) while safeguarding debt sustainability. The government plans to finance the NST partly through public borrowing, which should continue to be supported by careful debt management. There are several plans underway to increase domestic revenues by boosting the registration of new taxpayers as well as through innovative schemes and greater use of technology to strengthen tax compliance. Further progress on identifying and managing potential government liabilities—so-called fiscal risks—will be important to ensure that public resources are well protected for use on priority spending.

Fiscal policy --- Finance, Public. --- Banks --- Deflation --- Depository Institutions --- Exports and Imports --- Finance --- Financial institutions --- Fiscal risks --- Governmental Loans, Loan Guarantees, Credits, and Grants --- Industries: Financial Services --- Inflation --- International economics --- Loan guarantees --- Loans --- Macroeconomics --- Micro Finance Institutions --- Monetary economics --- Monetary policy instruments --- Monetary Policy --- Monetary policy --- Money and Monetary Policy --- Mortgages --- Price Level --- Prices --- Public Administration --- Public finance & taxation --- Public Finance --- Public financial management (PFM) --- Public Sector Accounting and Audits --- Revenue administration --- Revenue --- Taxation, Subsidies, and Revenue: General --- Rwanda

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Conventional fiscal accounting methodologies do not appropriately account for governments’ noncash policies, such as their contingent liabilities. When these liabilities are called, budget costs can be large, as evidenced by the United States’ saving and loan crisis. In general, deficit measures may underestimate the macroeconomic impact of government policies, promoting the substitution of noncash for cash expenditure and increasing future financing requirements. The paper describes extended deficit measures to address the problem, but notes their limited practical value. Nonetheless, some alternative methods of valuing contingent liabilities are proposed to gauge fiscal impact and facilitate budgetary control.

Budget --- Budgeting & financial management --- Budgeting --- Contingent liabilities --- Currencies --- Debt Management --- Debt --- Finance --- Financial institutions --- Financial instruments --- Fiscal policy --- General Financial Markets: General (includes Measurement and Data) --- Government and the Monetary System --- Government liabilities --- Governmental Loans, Loan Guarantees, Credits, and Grants --- Industries: Financial Services --- Investment & securities --- Investments: General --- Loan guarantees --- Loans --- Monetary economics --- Monetary Systems --- Money and Monetary Policy --- Money --- Payment Systems --- Public Administration --- Public finance & taxation --- Public Finance --- Public financial management (PFM) --- Public Sector Accounting and Audits --- Regimes --- Securities --- Sovereign Debt --- Standards --- United States

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Advanced economies made available more than 5 trillion USD through government-supported credit guarantee and direct loan programs to provide lifelines to firms in the face of the COVID-19 pandemic. Notwithstanding the unprecedented scale of credit made available, an in-depth analysis of the fiscal consequences is missing, and the costs of these programs are not recognized in a transparent way. In this paper, we fill in an important aspect of the fiscal picture by estimating the subsidies that were provided by the largest credit guarantee programs introduced in 2020 in seven advanced economies. We estimate the subsidies on a fair value basis that provides a consistent and comprehensive upfront measure of cost. We explain the logic behind applying a fair value framework in a government context and compare it to alternative approaches. For the programs that we examine, total credit extended totaled 1.7 trillion USD. The subsidy element (cash-equivalent subsidy) is estimated to be 67 percent of loan principal on average (37 percent, excluding the US PPP), with a wide range across programs, from 12 to 100 percent. The variation is explained by differences across programs including eligibility criteria, loan terms, compensation to lenders, and other program design choices.

Macroeconomics --- Economics: General --- Industries: Financial Services --- Money and Monetary Policy --- Diseases: Contagious --- Banks and Banking --- Public Economics: General --- Fiscal Policies and Behavior of Economic Agents: General --- Publicly Provided Goods: General --- National Government Expenditures and Related Policies: General --- National Budget, Deficit, and Debt: General --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Governmental Loans, Loan Guarantees, Credits, and Grants --- Health Behavior --- Interest Rates: Determination, Term Structure, and Effects --- Economic & financial crises & disasters --- Economics of specific sectors --- Finance --- Monetary economics --- Infectious & contagious diseases --- Credit --- Money --- Loans --- Financial institutions --- Loan guarantees --- COVID-19 --- Health --- Discount rates --- Financial services --- Currency crises --- Informal sector --- Economics --- Communicable diseases --- Discount --- Germany

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This paper discusses appropriate methods for disclosing fiscal risks from exogenous shocks and the realization of explicit or implicit contingent obligations of the government. Expanding on previous guidance prepared prior to the crisis, the note focuses on fiscal risks emerging from recent public interventions in the financial sector. Information on fiscal risks and its public reporting leads to a better understanding of the true state of the public finances. Thus, it helps policymakers design and gets public support for, appropriate responses to the realization of various contingencies. More specifically, in the context of the unfolding global financial crisis, a wide range of public sector interventions have been in support of the financial system. Although these interventions have been necessary, they have generated further fiscal risks. Comprehensive reporting would help governments to define a management strategy of the assets and liabilities that they have taken on their balance sheet and to prepare exit strategies for reducing their presence in the financial sector and eventually withdrawing support.

Macroeconomics --- Public Finance --- Accounting --- Debt --- Debt Management --- Sovereign Debt --- Forecasts of Budgets, Deficits, and Debt --- Governmental Loans, Loan Guarantees, Credits, and Grants --- Public Administration --- Public Sector Accounting and Audits --- Public Enterprises --- Public-Private Enterprises --- Fiscal Policy --- Public finance & taxation --- Civil service & public sector --- Financial reporting, financial statements --- Fiscal risks --- Public debt --- Public sector --- Contingent liabilities --- Fiscal policy --- Public financial management (PFM) --- Economic sectors --- Financial statements --- Debts, Public --- Finance, Public --- Thailand