IMF Survey : Countries Explore Sales of Nonfinancial Assets to Help Reduce Debt

IMF News, May 8, 2013

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Canonical URL: IMF Survey : Countries Explore Sales of Nonfinancial Assets to Help Reduce Debt

Governments are exploring using nonfinancial assets, such as land and buildings, to help ease deficits and debt burdens.
The IMF study finds it is still unclear how much revenue asset sales can yield.
The study takes stock of nonfinancial assets held by governments in thirty-two economies and examines in detail eight advanced economies.
The study draws on data from the Organization for Economic Cooperation and Development (OECD), Eurostat, national authorities, and the IMF’s Government Finance Statistics database.
Publication date on the page: May 8, 2013.

Nonfinancial assets, when reported, comprise mostly structures—such as roads and buildings—and land.
Nonfinancial assets can also include computer software, research and development, and valuables such as works of art, precious metals, and gemstones.
Reported levels differ widely across countries:
- Averaging 67 percent of GDP.
- 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.
For most countries in the sample, the value of nonfinancial assets held by governments is higher than the value of financial assets, and total assets are in most cases above gross debt.
Example specifics:
- Australia’s higher share of nonfinancial assets is due to its large natural resource assets.
- Nonfinancial assets may be underestimated when natural resources are not reported (example: Canada).
Subnational governments hold a large portion of nonfinancial assets in many countries, totaling more than one-half of total nonfinancial assets in several cases; the share is particularly high in federal states like Canada, Germany, and the United States.

Most of the eight advanced economies have laid out strategies for improving reporting and management of nonfinancial assets.
So far, little revenue or savings have been obtained relative to the size of deficits and debt.
Factors limiting revenue realization include:
- Costs of relocating public administration offices when buildings were sold (France).
- Reduced availability of assets after earlier privatization reforms (United Kingdom).
- Large shares owned by local governments (Japan, United States).
Notable examples of revenue-creating actions:
- Sale of spectrum rights in the United Kingdom yielding proceeds of 0.15 percent of GDP.
- 2005 introduction of a road toll for trucks in Germany yielding annual revenues of 0.2 percent of GDP.
Other options identified include collection of user charges (such as road tolls), streamlining public administrations, and exploitation of natural resources.

Data gaps remain large; only a few countries report values of land and natural resource assets.
Currently, only thirty-five countries report information on nonfinancial assets to the IMF and OECD.
Complications arise from the use of different methods in data collection and asset valuation across countries.
Recommendations and next steps from the study:
- Expand and improve the data collected on nonfinancial assets to enable informed decisions about sales or alternative management.
- Move toward one standard reporting method and more consistency in valuation methods for comparability.
Quote: “The analysis should help government finance officials arrive at a better indicator of their governments’ net worth,” said Elva Bova, economist with the IMF’s Fiscal Affairs Department and co-author of the study.
Quote: “For comparability purposes, moving toward one standard reporting method along with more consistency in valuation methods would be best,” said Robert Dippelsman, economist in the IMF’s Statistics Department and co-author of the study.

Source: IMF Survey : Countries Explore Sales of Nonfinancial Assets to Help Reduce Debt (May 8, 2013).