2.6 Guarantee of Debt

The state's guarantee power (the constitutional-and-statutory frame): The purpose: the sovereign guarantee — the state's promise backing the SOEs'-and-projects' borrowing (the credit-enhancement); The authorisation's discipline: the parliament's approval — the guarantee's ceiling-and- conditions (the annual budget's debt-and-guarantee faces); The risk: the contingent liability — the called guarantee's cost landing on the treasury (the SOE debt's sovereign absorption's history); The reporting: the guarantee's register; the parliament's scrutiny; The subnational faces: the provincial-and-local borrowing within the limits (the IGFA + the NNRFC's recommendations — Unit 4's depth). Exam Focus Long questions: (i) The financial procedures of the three levels (the federal's twin bills- and-funds architecture; the provincial-and-local mirrors); (ii) The taxing power's three-tier division (the schedules' table + the principles); (iii) The directives' fiscal face (the non- justiciability AND the budget's implementation role); (iv) The guarantee of debt (the purpose-authorisation-risk-reporting chain). Short questions: the Consolidated Fund; the Contingency Fund; contingent liability; the NNRFC. Trick areas: (i) The Finance Bill and the Appropriation Bill are SEPARATE authorisations — taxes and spends; (ii) The directives bind the BUDGET's politics, not the court's docket — the non-justiciable rule with the fiscal meaning; (iii) The guarantee is the STATE'S liability-in-waiting — the contingent, not the present, debt.