Contingency fund
A contingencies fund or contingency fund is a fund for emergencies or unexpected outflows, mainly economic crises.
European Union
[edit]The European Union created a vast contingency fund in 2010 to counteract the Great Recession.[1]
European finance ministers, the European Central Bank (ECB), and the International Monetary Fund (IMF) took steps to address the government debt crisis in Europe, which began in Greece by establishing a joint EU-IMF program to provide access to nearly $1 trillion in loans for the 16 eurozone nations in the event that they faced difficulties in borrowing from world bond markets.[1]
The program aimed to give Greece financial stability to balance its budget, restructure its economy, and avoid borrowing from the open market.[1]
Overall, the initiatives sought to restore confidence in European governments and safeguard the nascent global economic recovery.[1]
India
[edit]National Contingency Fund
[edit]Article 267(1) of the Indian Constitution authorised[2] the establishment of a contingency fund of India.
Accordingly, in 1950, the Indian Parliament enacted the Contingency Fund of India Act 1950. The Contingency Fund of India exists for disasters and related unforeseen expenditures.[3]
The fund is administered by the Finance Secretary (Department of Economic Affairs) on behalf of the President of India and it can be operated by executive action. In 2005, it was raised from Rs. 50 crore to Rs 500 crore.[4] In 2021, it was proposed to raise the fund to Rs 30,000 crore.
State contingency funds
[edit]Similarly, a Contingency Fund for each Indian State is established under Article 267(2) of the Constitution, placing funds at the disposal of the Governor to enable them to make advances to meet urgent unforeseen expenditure, pending authorisation by the State Legislature.
The corpus of the funds varies across states and the quantum is decided by the State legislatures.[5]
Spain
[edit]In Spain, the contingency fund is used in economic crisis for public work and similar stimulus activities.[citation needed] There is social security contingencies fund called reserve fund, to pay pensions.[citation needed]
United Kingdom
[edit]| Contingencies Fund Act 1974 | |
|---|---|
| Act of Parliament | |
 | |
| Long title | An Act to make new provision with respect to the maximum capital of the Contingencies Fund. |
| Citation | 1974 c. 18 |
| Dates | |
| Royal assent | 23 May 1974 |
| Other legislation | |
| Amends | |
| Text of statute as originally enacted | |
| Text of the Contingencies Fund Act 1974 as in force today (including any amendments) within the United Kingdom, from legislation.gov.uk. | |
In the early part of the nineteenth century, the Civil Contingencies Fund was created in the United Kingdom. It is held by the Treasury, and its use is regulated by the Miscellaneous Financial Provisions Act 1946.[6] It may be used for urgent expenditure in anticipation that the money will be approved by Parliament, or for small payments that were not included in the year's budget estimates.
The Contingencies Fund Act 1974 (c. 18) sets the size of the fund as two percent of the amount of the government budget in the preceding year.[7] This was temporarily amended by the Contingencies Fund Act 2020 and later the Contingencies Fund Act 2021 in light of the COVID-19 pandemic.[8]
When Parliament votes to approve the urgent expenditure, the money are repaid into the Contingencies Fund. As Parliament is effectively forced to approve actions ex post facto (after they have happened), the Treasury's use of the fund is scrutinised in detail by the Public Accounts Committee.
See also
[edit]
Notes
[edit]- ^ a b c d Schneider, Howard (10 May 2010). "Europe announces vast contingency fund, racing to contain crisis". The Washington Post.
- ^ INDIAN POLITY BY M LAXMIKANT PAGE NO:22.25, a Contingency Fund of india
- ^ "Government Account". Government of India. Archived from the original on 21 July 2011. Retrieved 20 April 2011.
- ^ "Contingency fund limit raised to Rs 500 crore". TNN. 10 March 2005. Archived from the original on July 8, 2012. Retrieved 20 April 2011.
- ^ "Contingency Fund of India - Arthapedia".
- ^ "Miscellaneous Financial Provisions Act 1946". The UK Statute Law Database. Office of Public Sector Information. Retrieved 11 May 2010.
- ^ "Contingencies Fund Act 1974". The UK Statute Law Database. Office of Public Sector Information. Retrieved 11 May 2010.
- ^ "Changes To Legislation". www.legislation.gov.uk. Retrieved 2020-05-04.