10 percent of GDP at end-1998/99, is not factored into the analysis. In addition, the stock of public enterprise sector debt needs to be interpreted carefully as the PEs are estimated to have positive net worth and the government, as owner of the PEs, could actually be viewed as owning equity equivalent to PE net worth. 2 In the other direction, any contingent liabilities of the public sector are also excluded from the debt stock, but these, with the exception of those associated with financial sector restructuring (most of which are already incorporated into the
permitting a preliminary assessment of the possible financial savings from public enterprise reforms. A. Definition of Net Subsidies 79. Net subsidies to PEs are subsidies from the government to PEs net of subsidies to the government from PEs. The subsidies from the government to PEs are of two types: direct and indirect. Direct subsidies include cash equity injections from the government, donor grants, and asset transfers. Indirect subsidies include equity support, favorable financing terms, favorable fiscal terms, and others. Equity support is used to absorb PEs
contingent liabilities from loss-making PEs, PPPs, and government guarantees could amount to 10½-11 percent of GDP in 2007 and accounting for fiscal risks could raise the fiscal deficit by about 2 percent of GDP ( Table 1 ). 2 Table 1. Fiscal risks from the operations of SOEs, PPPs, and government guarantees (in percent of GDP) 2007 Fiscal deficit 2.5 PEs’ net operating losses 1 / 0.3 Airport PPP 0.5 Restructuring of ICS 1.3 Reconstitution of SAR’s capital 0.4 2 / Stock of