the use and budgetary treatment of guarantees and direct ... · direct loans • many countries...
TRANSCRIPT
The use and budgetary
treatment of guarantees
and direct loans by
OECD countries
Ian Hawkesworth
Budgeting Division
Public Governance and Territorial Development Directorate, OECD
The survey
• The survey was conducted during April and May 2010 with the aim of presenting the results to the Working Party of Senior Budget Officials
• The purpose is to study the use and budgetary treatments of guarantees and loans in general as well as their use in response to the financial crises.
• It was sent out to senior budget officials in 32 OECD member countries which generated responses from 22 countries.
The presentation
1. Volume of guarantees and loans
2. The issuance of guarantees
3. The issuance of direct loans
4. Summary and future work
1. Volume of guarantees and loans
Loan guarantees
Direct loans
2 307 272 192 180
Value of total stock of loan guarantees and direct loans
issued by governments as of April-May 2010 for a subset
of OECD countries*
(millions of U.S. dollars)
*Australia, Austria, Canada, Denmark, Finland, Germany, Greece,
Hungary, Iceland, Mexico, Netherlands, New Zealand, Norway, Poland,
Portugal, Slovak Republic, Sweden, Switzerland, Turkey, and the UK.
Amount of guarantees and direct loans per sector
(millions of U.S. dollars)
Sector Loan guarantees Direct loans
Export 234,360 9,000
Student loans 2,458 66,613
Schools, Hospitals construction 1,522 7,364
Agriculture 2,021 8,107
Financial sector 1,883,027 22,943
Non-financial, non-agriculture 35,275 39,791
Other sector 148,610 38,361
Total 2,307,272 192,180
2. The issuance of guarantees
The Issuance of individual guarantee
Sectors with guarantees
* Some services (export and student loans) are outsourced from the central government to legally independent
organisations governed by public law.
The aim of premiums in countries with
financial-sector guarantees
How are the premiums calculated in
export guarantees?
1) Australia, Iceland, United Kingdom
2) Austria, Germany, Hungary, Netherlands, New Zealand, Norway, Sweden
3) Finland, Canada
4) Portugal
5) Poland
Apart from administration fees, what
expenditures concerning the guarantees
appear in the budget?
Indemnities: Iceland, Poland, Netherlands, Spain, Germany, Austria, Portugal, New Zealand
Other: Germany, Norway, Switzerland, Mexico, Sweden, Finland, Hungary, Greece, Denmark
No expenditure appear: Canada, UK, Norway, Switzerland, Slovak Republic, Australia, Turkey
Were the same procedures used for the
issuance of guarantees at the time of the GFC
as is normally the case, or were other
procedures used?
General procedures? N Country
No, general procedures and rules were ignored ex ante due to extreme circumstances
2
Denmark, Netherlands
Yes, general procedures and rules were used
10
Canada, Australia, Poland, Norway, Austria, Portugal, Sweden, New Zealand, Greece, Spain
Yes, but some rules were adjusted 6 Hungary, Finland, Mexico, Germany, Turkey, United Kingdom
No guarantees were issued in response to the Global Financial Crisis.
3 Iceland, Switzerland, Slovak Republic
A majority reports an increase in the stock of
government guarantees to financial and other
corporations due to the Global Financial Crises
3. The issuance of direct loans
Sectors with direct loans
In general, what government revenues do
direct loans generate?
Other: Norway, Denmark, Switzerland, Austria, Sweden, Finland
Administration fees: Germany, Denmark, Norway, Sweden, New Zealand, Turkey
Interest income: Canada, Australia, Iceland, UK, Norway, Austria, Denmark, Slovak Republic,
Mexico, Portugal, Sweden, Hungary, New Zealand
None: Spain
Apart from administration fees, what
expenditures concerning the direct
loans appear in the budget?
Where are the issuances and performance
of direct loans reported?
4. Summary
• Of the 22 countries surveyed, all indicated that they do have a regular
issuance of state guarantees and that all but five countries issue
direct loans
• Many countries adjusted or adapted the ordinary procedures when
dealing with guarantees and direct loans in response to the financial
crises.
• A majority of countries reported an increase in the issuance and total
stock of guarantees and direct loans in response to the Global
Financial Crises. The increase in direct loans is less substantial than
the increase in state guarantees.
• The budgetary treatment of expenditures varies between the
responding countries, connected to guarantees and direct loans. For
both guarantees and direct loans, it is common that no expenditure
appear at all (apart from administration fees)
4. Future work
• Despite 20 countries responding there are still substantial gaps in our knowledge of how guarantees and loans are treated.
• Some methodical issues:
– Definitions will have to be clearer
– Many answers were “depends on the case”
– Many questions were only partially answered
• In response it is proposed to hold an experts meeting that will report to the next Senior Budgetary Officials (SBO) meeting.
