lmplicit Pension Debt in the Middle-East and North Africa: Magnitude and Fiscal lmplications

David Robalino and Tatyana Bogomolova

MPRA Paper from University Library of Munich, Germany

Abstract: This paper breaks down the contingent liability of a mandatory pension system into two components: the implicit pension debt and the pay-as-you-go asset. It then estimates these two components for 12 pension schemes across six MENA countries and presents international comparisons. The results show that implicit pension debts are large (in the order of 50% to 100% of GDP), often higher than the explicit public debt. At the same time, the large majority of pension schemes have negative pay-as-you-go assets. Under these circumstances, it is misleading to consider the implicit pension debt a contingency, as the government will have to finance it with almost certainty. In the absence of a default the fiscal impacts are expected to be large. The paper recommends including in the assessment of public debt sustainability the implicit liabilities of the mandatory pension system and the pay-as-you-go asset.

Keywords: Pensions; implicit pension debt; fiscal policy; government bonds; contingent government liabilities (search for similar items in EconPapers)
JEL-codes: E62 G23 H55 (search for similar items in EconPapers)
Date: 2006-06
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: lmplicit Pension Debt in the Middle-East and North Africa Magnitude and Fiscal lmplications (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:12016

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