Interpreting Fiscal Risk for Lack of Bank Indonesia’s Capital

The research is focused on determining the government's obligation to meet the shortage of capital of Bank Indonesia (BI), as the central bank, in the National State Budget (APBN). The research analyzes the basis of the government's obligation to meet BI's lack of capital and a mechanism for fulfilling the government's obligations to cover BI deficiencies in line with the objectives of the APBN. This study uses a normative legal research method with a statute, interdisciplinary, and analytical approach. The result shows that the government's obligation to suffice BI's capital is intended to maintain BI's sustainability so that BI can continue to carry out its responsibilities and obligations to maintain monetary stability. Monetary stability has implications for economic stability and increases in people's welfare. In addition, the fulfilment of government obligations is contingent, limited and final. This obligation will only be born if BI is no longer able to overcome the lack of capital. The cause of the lack of capital is beyond BI's control, as evidenced by the results of an examination by the Supreme Audit Agency and requires the approval of the House of Representatives.

A Study on Fiscal Risk of China’s Employees Basic Pension System under Longevity Risk

It is generally accepted that China’s Employees Basic Pension System (CEBPS) cannot cover its expenses. The government needs to fill the gap in income and expenditure with fiscal revenue to ensure sustainability of the system, which may cause it to take fiscal risk caused by the volatility of the fund gap. In this article, through the establishment of a prediction model for the income and expenditure of CEBPS with dynamic mortality, we aimed to measure the fiscal risk caused by longevity risk and provide policy basis for the government. We found that longevity risk leads to serious fiscal risk. The income and expenditure gap of CEBPS fluctuates greatly, and the 2.5% and 97.5% quantiles of fund balance in 2067 are 1.52 and 0.44 times the expected value, respectively. The knock-on effect of fiscal risk, measured by value-at-risk (VaR), is 1.15 times gross domestic product and 4.75 times state fiscal expenditure in 2020. In this article, we not only calculate the expected value like the other literatures but also discuss the volatility of the CEBPS fund gap.

Risk Management Implementation in Indonesian State Budget Fiscal Risk Disclosure

Fiscal risk management is part of the management of financial risk in the State Budget. Basically, these risks are interrelated although they are different things. State financial risk as an inherent risk of State Budget has a different process from fiscal risk management. This study aims to evaluate the management process and disclosure of fiscal risk in the State Budget using a case study-qualitative approach. The integration of the risk management system between the risk management unit and the fiscal risk management unit, and development of fiscal risk management framework could improve the process of managing and disclosing fiscal risk in the Budget Statement.

Getting Closer by Moving Apart? Strategic Interdependence and Preferences for Debt Mutualization in the Eurozone

Existing research suggests that a “democratic constraint” blocks progress towards debt mutualization in the eurozone: voters in creditor countries fiercely oppose debt sharing, while voters in debtor countries strongly support remaining in the euro, which limits their governments’ bargaining power. However, this literature neglects that preferences depend on expectations about what other countries will do. We document this strategic interdependence with a novel survey experiment in Germany and Italy, conducted at a crucial moment during the COVID-19 pandemic. Italian voters vastly discount the costs of a disorderly exit, while they strongly reduce their support for the euro if austerity is a condition for continued euro membership. Faced with the possibility of Italexit, German voters weigh the costs of a possible breakup of the euro more heavily than the costs of debt mutualization. A majority thus accepts debt mutualization. These results suggest that voters take strategic interdependence into account when formulating their preferences and that public opinion is not (or no longer) a binding constrain for increasing fiscal risk-sharing in the eurozone. Moreover, we reconstruct the debate about the pandemic recovery fund in Germany and Italy and show that the German change of position was aimed at defusing a threat to the integrity of the eurozone.

Islamic Republic of Afghanistan

This remote mission provided the authorities with advice in fiscal risk management. The mission covered three interrelated topics: (i) the Public Finance and Expenditure Management (PFEM) Law and fiscal risks oversight and management; (ii) the Stated-Owned Corporations (SOC); and (iii) the Public-Private Partnerships (PPP). This report focuses especially on reforms that could be implemented during the life of the next IMF program.

COVID-19 and The Livelihood of the Poor Peoples in some sub-Saharan Africa

The aim of this article is attempting to investigate in some sub-Saharan Africa risk due to COVID-19 and its impact on the livelihood of the poor based on an eyewitness, firsthand information and reports and Asses the tradeoff between the slogan of “stay at home” and the daily activity of the poor in the Africa. Subject and Methods: The article was used both systematic and empirical analysis approach to get brief idea on the COVI-19 and the Livelihood of the poor in the continent. The study looks highly about COVID-19 and economic contraction and political instability in the continent. The poor lose again, fiscal risk, export reduction, domestic violence and remittance lock are the main portion were clearly reviewed in this review article. Results: The article revealed that from all classes of people, the poor become poorest and livelihood of the marginalized people become critical question. Consequently, unemployment, inflation and income inequality are aggravated as pandemic arise in Africa. Most of oil exporting country like Nigeria, agricultural export country like Ethiopia, Kenya and Ivory coast are getting worse due to lock down. Conclusion: Slowing economic growth will undermine the ability of governments to provide basic public services in the medium term. The reputation of the security forces will further deteriorate as they struggle to enforce lockdowns with limited resources and discipline. Finally, the author suggest that Africa should follow FIDH and WB to arise from these ashes of destruction.