International Monetary Fund has urged individuals and nations like Nigeria to look beyond depth they owe to also count their assets ignorer to find a balance and manage better. According to the multilateral financial institution “while nations keep close tabs on debt, they are less clear on how much it they own; the assets. Things like roads, bridges, and sewer pipes are assets for a country, as well as the money governments have in the bank, their financial investments, and payments owed to them by individuals and businesses.
It further said “natural resource reserves in the ground are also part of assets, something that is particularly important for natural resource-rich countries like Nigeria and Norway. But assets also include state-owned enterprises such as public banks and, in many countries, utilities such as public electricity and water companies”. IMF Chart from the new Fiscal Monitor analyses public wealth using 2016 data from 31 countries—from The Gambia, to the United States, as well as Japan, Turkey, Brazil, the United Kingdom and China, to name a few. Their assets amount to $101 trillion, or 219 per cent of GDP.
It said “let’s look at the United Kingdom. The research shows how its balance sheet expanded massively during the global financial crisis, when the government decided to rescue several large private sector banks. This rescue substantially contributed to the increase in the UK’s public sector net debt, which is the total amount of debt minus the government’s cash in hand. Fiscal Monitor includes them on the balance sheet and shows that a US recession would erode net worth—the value of assets minus liabilities— by some 26 percent of GDP under stress.
“Japan is an interesting case, where gross public sector debt stood at some 283 per cent of GDP at the end of 2017. However, other parts of the public sector hold over half of this debt. The private sector holds a smaller—but still sizeable—amount of public debt worth 134 per cent of GDP. More generally, the research illustrates that public sector assets could act as a buffer that allows governments with high public wealth to weather recessions better than those with low public wealth. Stronger balance sheets—a statement of what you owe and own at a given point in time—allow governments to boost spending in a downturn”.
According to the IMF “all governments can better manage their resources. They should start by bringing data together to come up with a rough estimate of public sector assets, liabilities, and wealth. Over time, better accounting and statistical collections can improve the accuracy of these estimates. Governments can use them to do basic balance sheet risk and policy analysis, using the framework presented in this report. Once governments complete this exercise they will be able to show their citizens the full extent of what they own and owe, and better use public wealth to meet society’s economic and social goals”.
