Contingent liabilities: The Colombian experience

This report describes, from the conceptual framework for contingent liabilities, the valuation for the fiscal commitments arising from infrastructure projects developed under public-private partnership schemes, public credit transactions secured by the nation and claims against the Nation - to fiscal mitigation mechanism adopted by the Contingencies Fund State Entities. It is the basis for the fiscal risk assessment of contingent liabilities associated with natural disasters.

The process of identifying, assessing, and managing different sources of contingent liabilities in Colombia started with the formation of the Risk Unit of MHCP in 1998. The law 448 of 1998 establishes that Government entities, state, and local governments should include in their debt service budgets, the necessary funds to cover possible losses experienced from unforeseen events.

This report is the first publication on the management of contingent liabilities of the Nation, published by the Ministry of Finance and Public Credit, which seeks to disseminate technical and regulatory efforts made by the General Directorate of Public Credit and National Treasury on the subject and present the main figures and their tax implications, constituting a highly relevant tool to monitor the country’s fiscal performance.