Indonesia's Public Wealth: A Balance Sheet Approach to Fiscal Policy Analysis

IMF Working Papers, April 24, 2019

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Canonical URL: Indonesia's Public Wealth: A Balance Sheet Approach to Fiscal Policy Analysis

Authors: Majdeline El Rayess, Avril Halstead, Jason Harris, John Ralyea, Alexander F. Tieman
Published: April 24, 2019
Series: IMF Working Papers
DOI: https://doi.org/10.5089/9781498303798.001

Public sector balance sheets (PSBS) provide a framework for comprehensive and deep analysis of fiscal risks and policies.
The paper applies PSBS analysis to assess risks to Indonesia’s public sector stemming from its public corporations.
The paper shows that the government’s plans to finance a ramp-up in public investment with additional tax revenue increases both economic growth and public wealth.
Authors: Majdeline El Rayess, Avril Halstead, Jason Harris, John Ralyea, Alexander F. Tieman
Publication date: April 24, 2019

PSBS provides a framework to analyze fiscal risks and policies across the public sector.
PSBS analysis can identify exposures originating from public corporations and their implications for government fiscal positions.
PSBS facilitates evaluation of how policy choices (e.g., financing public investment) affect aggregate public wealth and economic outcomes.

PSBS analysis is applied specifically to assess risks to Indonesia’s public sector stemming from its public corporations.
The analysis highlights links between public corporation balance sheets and broader fiscal risks to the government.
The paper documents how public corporation exposures feed into the consolidated public sector fiscal position (text notes application; specific numerical risk measures are presented in the full paper).

The paper examines government plans to finance a ramp-up in public investment with additional tax revenue.
Key result: financing increased public investment with additional tax revenue increases both economic growth and public wealth.
Policy implication: revenue-financed public investment can be consistent with improving public wealth while supporting growth (further quantitative details and scenarios are in the full paper).