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Schedule of Contingent Liabilities

as at 30 June 2011

Schedule of Contingent Liabilities
2010
$000
2011
$000

Quantifiable Contingent Liabilities

17,060 Guarantees and indemnities 16,146
2,451,362 Uncalled capital 4,172,545
132 Legal proceedings and disputes 132
1,662,369 Other contingent liabilities 1,385,342
4,130,923 Total Contingent Liabilities 5,574,165

Contingent liabilities are costs that the Crown will have to face if a particular event occurs. Typically, contingent liabilities consist of guarantees and indemnities, uncalled capital, legal disputes and claims. The contingent liabilities managed by the Department on behalf of the Crown are a mixture of operating and balance sheet risks and they vary greatly in magnitude and likelihood of realisation. In general, if a contingent liability were realised it would have a negative impact on the operating balance, net Crown debt and net worth. However, in the case of contingencies for uncalled capital, the negative impact would be restricted to net Crown debt.

Where contingent liabilities have arisen as a consequence of legal action being taken against the Crown, the amount included is the amount claimed and thus the maximum potential cost. It does not represent either an admission that the claim is valid or an estimation of the possible amount of any award against the Crown.

The majority of the quantified contingent liabilities shown above arise from the uncalled capital element of the Crown's investments in the Asian Development Bank and the World Bank, and promissory notes issued in favour of IMF.

Significant decreases in contingent liabilities are owing to exchange rate fluctuations.

The Crown's exposure to the DGS and WFGF is detailed in the Supplementary Financial Schedules - Overview on pages 88 and 89.

Unquantifiable Contingent Liabilities

The Treasury also administers a number of contingent liabilities that cannot be quantified. These arise primarily from institutional guarantees and indemnities. Readers are referred to the Financial Statements of the Government for further details.

Contingent Assets

The Department, on behalf of the Crown, has no contingent assets (2010: nil).

The Statement of Accounting Policies is an integral part of these supplementary financial schedules.

For a full understanding of the Crown's financial position and the result of its operations for the year, refer to the consolidated Financial Statements of the Government for the year ended 30 June 2011.

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