Countries Explore Sales of Nonfinancial Assets to Help Reduce Debt

Nonfinancial assets are often larger than financial assets

Data coverage on government assets still has many gaps

Use of nonfinancial assets for debt reduction remains limited

As governments run out of ways to trim budget expenditures, many are looking for alternative ways to improve their fiscal pictures. But generating revenue from sales of nonfinancial assets tends to be more difficult than privatizing public enterprises, in particular where assets include mostly infrastructure. According to the study, options include the collection of user charges, such as road tolls, as well as streamlining public administrations and exploitation of natural resources.

The study takes stock of the nonfinancial assets held by governments in thirty-two economies. For eight advanced economies it examines to what extent these assets have been used to create new funding sources and reduce debt. The study is the first to provide such a comprehensive cross-country comparison by using data from the Organization for Economic Cooperation and Development (OECD), Eurostat, national authorities, and the IMF’s own Government Finance Statistics database.

“The analysis should help government finance officials arrive at a better indicator of their governments’ net worth,” said Elva Bova, an economist with the IMF’s Fiscal Affairs Department and co-author of the study. “Once they have this picture, they can begin to decide things like whether to sell some of the assets, or whether they can be more efficiently managed—perhaps by leasing buildings or setting up user fees.”

Snapshot of nonfinancial assets

Nonfinancial assets, when reported, comprise mostly structures—such as roads and buildings—and land. In most cases, the value of these assets has increased over time reflecting increasing property and commodity prices in the early 2000s. Nonfinancial assets can also include a variety of other assets such as computer software, research and development, and valuables such as works of art, precious metals, and gemstones.

The levels of reported nonfinancial assets differ widely across countries, averaging 67 percent of GDP and ranging from highs around 120 percent of GDP for the Czech Republic, Japan, Korea, and Latvia, to lows near 25 percent of GDP for Bolivia, El Salvador, and Switzerland. One reason for the wide range stems from the various ways data is reported and collected—for example, only a third of countries reports the value of land. The contrast also results...