The financial landscape is full of hidden risks, and contingent liabilities represent one of the most significant yet often overlooked threats to fiscal and financial stability. This training course provides a critical examination of how these potential obligations—from government guarantees to implicit bailouts—can materialize and destabilize an economy. Designed for central bank professionals, treasury officials, and regulators, this program offers a comprehensive framework for identifying, measuring, and managing these risks before they become a crisis. Participants will learn how central banks can act as guardians, implementing safeguards to protect against the unforeseen costs that can strain public finances and erode market confidence.

This intensive five-day course will explore the strategic role of central banks in a world of growing fiscal-financial interconnectedness. We will delve into the analytical tools needed to quantify contingent liabilities, the governance structures required for effective oversight, and the policy instruments available to mitigate their impact. Through a blend of theoretical insights and real-world case studies, attendees will gain practical skills to develop robust reporting mechanisms and integrate contingent liability analysis into their financial stability assessments. By the end of the course, you will be equipped to build a more resilient financial system capable of withstanding these unseen threats.

Duration: 5 days

Target Audience:

• Central bank financial stability and research staff
• Treasury and public debt management officials
• Bank supervisors and financial regulators
• Fiscal policy and budget planners
• Risk managers in financial institutions
• Economists and policy advisors
• Senior management and board members
• Internal auditors and compliance officers
• International financial institution staff
• Academics and researchers

Objectives:

• Understand the concept and types of contingent liabilities
• Grasp the transmission channels from contingent liabilities to financial stability
• Develop analytical tools for identifying and measuring these risks
• Formulate policy and governance frameworks for managing contingent liabilities
• Interpret the role of the central bank in safeguarding against fiscal risks
• Evaluate the impact of government guarantees on market behavior
• Assess the risks associated with implicit guarantees and state-owned enterprises
• Examine the role of transparency and reporting in managing these risks
• Apply lessons from historical crises involving contingent liabilities

Course Modules: Module 1: The Anatomy of Contingent Liabilities

• Defining explicit and implicit contingent liabilities
• Types of contingent liabilities in a modern economy
• The distinction between fiscal and quasi-fiscal risks
• How contingent liabilities can become a real obligation
• The macroeconomic implications of hidden debt

Module 2: Central Banks' Role in Fiscal-Financial Nexus

• The importance of the central bank's balance sheet
• The role of the central bank in public debt management
• Understanding the impact of fiscal policy on monetary policy
• The central bank as a guardian of financial stability
• Collaboration between central banks and fiscal authorities

Module 3: Identification and Measurement

• Methodologies for identifying contingent liabilities
• Quantitative and qualitative techniques for risk assessment
• The use of stress testing and scenario analysis
• Developing a comprehensive contingent liability database
• Challenges in measurement and data availability

Module 4: Governance and Risk Management Frameworks

• Establishing a clear governance structure for oversight
• The role of legislative and regulatory frameworks
• Designing a risk-sharing mechanism
• Implementing effective internal controls
• Integrating contingent liability risk into strategic planning

Module 5: The Risks of Government Guarantees

• Types of government guarantees and their purpose
• The moral hazard created by guarantees
• Assessing the fiscal cost of guarantees
• The impact on financial markets and credit allocation
• Case studies of large-scale government guarantees

Module 6: Implicit Guarantees and State-Owned Enterprises

• The concept and challenges of implicit guarantees
• Assessing the financial health of state-owned enterprises
• The risks posed by undercapitalized SOEs
• Designing a framework to manage SOE-related risks
• The role of the central bank in monitoring these entities

Module 7: Transparency, Reporting, and Communication

• The importance of transparent reporting on contingent liabilities
• International standards for fiscal reporting
• Communicating risks to the public and market participants
• The role of central bank publications and reports
• Building institutional credibility through transparency

Module 8: Crisis Management and Resolution

• The central bank's role in a sovereign debt crisis
• The use of emergency liquidity assistance
• Managing financial stress caused by fiscal shocks
• The challenges of bank resolution in the presence of fiscal constraints
• The role of international cooperation in crisis response

Module 9: Case Studies and Future Outlook

• Historical examples of crises linked to contingent liabilities
• Analyzing the lessons from the global financial crisis
• The impact of climate change on contingent liabilities
• The rise of new forms of contingent liabilities in the digital age
• The future of fiscal-financial risk management

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.