Government liability fund

A government liability fund is a financial mechanism used by governments to cover payments arising from legal judgments, settlements or claims against public entities. Such a fund serves as a source to fulfill obligations when a court rules that a government must pay damages or settle a legal dispute. In some countries, the government liability fund exists as a distinct legal entity, specifically designated for paying these liabilities without requiring a separate legislative allocation for each case. For example, the United States operates a Judgment Fund to cover such payments independently of annual budget appropriations.

In other countries, the responsibility for paying judgments is embedded within larger financial structures, such as treasuries, consolidated funds or contingency funds. In these cases, the liability fund does not operate as a standalone entity but rather as part of the broader government treasury or central accounts, with funds drawn from a general pool to meet legal obligations. This variation in structure reflects each country's approach to public financial management and the degree of flexibility it affords in managing unforeseen liabilities or judicial mandates.