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Managing Fiscal Risks from National Airlines in Pacific Island Countries

Vybhavi Balasundharam, Leni Hunter, Iulai Lavea and Paul Seeds

No 2021/183, IMF Working Papers from International Monetary Fund

Abstract: Pacific island countries (PICs) rely on national airlines for connectivity, trade, and tourism. These airlines are being struck hard by COVID-19. Losses will weigh on public sector balance sheets and pose risks to economic recovery. With a backdrop of tight fiscal space and increasing government debt, losses in airlines are adding to fiscal risks in some PICs. This paper discusses tools to evaluate and manage the fiscal risks from national airlines in the Pacific. We present a snapshot of the current state of Public Financial Management (PFM) practices in PICs and detail the best practices. This exercise would illustrate the areas in which PICs have scope to improve their risk management with regard to national airlines. We then discuss the use of diagnostic tools and capacity development to enhance monitoring and risk management. Greater transparency and accountability in the airlines, combined with rigorous oversight, would be the first step towards improved financial management of national airlines.

Keywords: B. airline planning process; airline Support; national Airlines; PFM perspective; D. budget execution consideration; financial support; Fiscal risks; Budget planning and preparation; Financial statements; Public enterprises; COVID-19; Pacific Islands (search for similar items in EconPapers)
Pages: 27
Date: 2021-07-09
New Economics Papers: this item is included in nep-acc and nep-tre
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