The federal government supports some private activities by providing credit assistance to individuals and businesses. CBO uses two approaches for estimating the lifetime costs of federal credit programs: the accounting procedures prescribed by the Federal Credit Reform Act of 1990 (FCRA); and an alternative approach that accounts for the market value of the government’s obligations, known as the fair-value approach.

In this primer, CBO discusses the differences between the FCRA and fair-value approaches, its estimation of cash flows, discount rates, and risk premiums, and the agency’s method for computing fair-value estimates.

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