The National Government (NG) has long relied on both domestic and foreign borrowings to finance many of its programs and projects. The country’s outstanding NG debt includes borrowings of government-owned and -controlled corporations (GOCCs) that are NG-guaranteed. These liabilities are intended to bolster the creditworthiness of the GOCCs, facilitating their access to funding from the private sector and international markets. Although the GOCCs bear the responsibility of servicing their debts, these obligations represent contingent liabilities for the national government at any time a GOCC becomes unable to repay its debt and the advances made by NG.
This paper presents an overview of NG guarantees to GOCC debts, and the financial exposure that the NG faces due to these obligations. It also reviews the existing policies concerning the monitoring and reporting of contingent liabilities of GOCCs. The study discusses various fiscal measures such as the full disclosure policy and the budget modernization initiatives designed to facilitate efficient financial governance and enable the NG to navigate potential fiscal challenges effectively.