Managing government debt guarantees isdifficult because the potential costs of guarantees are hardto estimate and typically do not show up in the reportedbudget deficit. A good framework for managing guaranteescan, however, help governments overcome the difficulty andenhance the transparency of guarantees. This paper sets outa checklist of issues for a government to consider whendesigning or revisiting its framework for managingguarantees. The checklist comprises: (1) steps to establishmacroeconomic control over guarantees by setting limits ontheir use and restricting the authorization to grant them;(2) steps to improve decisions to grant individualguarantees by means of guidelines, restrictions, conditions,cost estimation, guarantees fees, and a structured processfor making the decisions; and (3) steps to ensure carefulmanagement after the granting of guarantees, including therecording and reporting of guarantees, arrangements to paywhen necessary, and learning from past experience.
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