IPSAS Explained: A Summary of International Public Sector Accounting Standards, 2nd Edition

1 Context of the Global Financial Crisis 2008-2009

The year 2008 saw the deepest recession since the 1930s. An unprecedented series of government interventions in the financial sector followed and the economy at large aimed at restoring confidence in national financial institutions and supporting global demand. Governments had to provide considerable financial resources to help the economy to recover from severe disruptions on the world's capital markets. The actions taken by governments involved significant expenditure of taxpayers' money.

The scale and breadth of this financial crisis and the complexity of the policy responses have created two crucial issues for public sector accounting. The first issue is simply to understand the nature of these unprecedented government interventions. While the developments are similar throughout all countries, no two countries' policy responses are identical. The second issue is to consider how these interventions should be reported in government accounts.

These interventions took place in many different ways. Public sector entities had granted guarantees, taken responsibility for toxic loans, performed fiscal support and made a number of purchases. Governments had put forward different sets of measures to counteract the economic downturn, with different emphasis on a particular policy according to the specific nature of the local environment, industry focus of the country, budget constraints, etc.

Interventions have typically included: