Global debt levels reached a record US$182 trillion (HK$1,426.5 trillion) in 2017, having grown 50 percent in the previous decade, but the picture looks less grim when public assets are taken into account, the International Monetary Fund said yesterday.
The IMF said a new database in its semi-annual Fiscal Monitor report showed considerable net worth in 31 countries that account for 61 percent of global economic output.
Assets in these countries were worth about US$101 trillion, or twice their gross domestic product, with just over half the total in public corporation assets, and just under half in natural resources such as oil or mineral wealth.
"Once governments understand the size and nature of public assets, they can start managing them more effectively," the IMF said in the report. "Potential gains from better asset management are considerable."
The Fund said that revenue gains from non-financial public corporations and government financial assets alone could be as high as 3 percent of GDP a year, equivalent to the annual corporate tax collections across advanced economies.
Global Financial Stability Report October 2018 reported that in the United States, risks continue to build in the public sector. Public sector debt has continued to climb, with the anticipated expansion in the federal deficit further exacerbating already-unsustainable debt dynamics.
The report applied a stress to the US public sector assets, heavily concentrated in public pension funds, mortgages and student loans, finding that a scenario involving a severe recession, higher long-term interest rates and rapid falls in stock and real estate prices would shrink US public net worth by an equivalent of 26 percent of GDP by 2020.
The report analyzed China's public balance sheet and found that its general government net financial worth has deteriorated in recent years to about 8 percent of GDP, largely because of sub-national borrowing and underperforming public corporations.