Description
| Summary: | This paper explores how privatizing a pension system can affect sovereign credit risk. For this purpose, it analyzes the importance that rating agencies give to 'implicit' pension debt (IDP) in their assessments of sovereign creditworthiness. We find that rating agencies generally do not seem to give much weight to IPD, focusing instead on 'explicit' public debt. However, by channeling pension contributions away from the government and creating a deficit of resources to cover the current pension liabilities during the reform's transition period, a pension privatization reform may transform IPD into explicit public debt, adversely affecting a sovereign's perceived creditworthiness, thus increasing its risk premium. In this light, accompanying pension reform with efforts to offset its transition costs through fiscal adjustment would help preserve a country's credit rating.
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| Item Description: | At head of title: Western Hemisphere Department.
"August 2008." |
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| Physical Description: | 1 online resource (25 pages) : illustrations |
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| Format: | Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. |
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| Bibliography: | Includes bibliographical references (pages 24-25). |
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| ISBN: | 1451915063
9781451915068
9781451870534
1451870531 |
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| Reproduction Note: | Electronic reproduction. |
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| Source of Description, Etc. Note: | Print version record. |
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| Action Note: | digitized |
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