Articles

The publication of the ‘Public Wealth of Nations’ in 2015 inspired the first study on public wealth by the International Monetary Fund – The IMF Fiscal Monitor on Managing Public Wealth in October 2018.

In this report, the IMF estimates global public assets to be worth twice the value of global GDP and able to generate non-tax revenues of 3 per cent of GDP annually.. However, this does not include real estate, which is not accounted for in most public accounts. Public real estate alone is estimated to be worth one-time GDP. Public commercial assets are estimated to be worth three times GDP globally.

IMF work published in August 2019 and in May 2021  clearly shows that governments with stronger net worth (assets minus liabilities) recover faster from recessions and have lower borrowing costs.

Following the publication of our book ‘Public Net Worth’ in 2023, the IMF published research to support the concept of Public Net Worth compared to traditional debt-based anchors. The IMF research shows that a Public Net Worth anchor is more conducive to public investment and economic growth while providing for sensible policy reactions to changes in long-term interest rates. The net worth anchor also precludes unsustainable debt dynamics. Simulated transition dynamics show that replacing a debt anchor with a net worth anchor does not necessarily lead to higher debt-to-GDP ratios.

The arguments for managing assets and liabilities are compelling, not only from a debt sustainability perspective, but even more so due to the fiscal challenges posed by our demographic changes.