Managing government debt guarantees is difficult because the potential costs of guarantees are hard to estimate and typically do not show up in the reported budget deficit. A good framework for managing guarantees can, however, help governments overcome the difficulty and enhance the...

Central to making good decisions about debt guarantees is assessing their expected and possible fiscal cost, a task that many governments still struggle with. This paper therefore describes a relatively simple scenario analysis method for estimating potential payments from the government when a...