What does ‘generating value from the balance sheet’ mean in practice for the public sector? Governments everywhere at every level own a vast array of commercial assets. According to the IMF, the value of public assets globally is twice that of global stock markets, twice global GDP and much larger than public debt. However, unlike listed equity assets, the public wealth is often unaudited, unsupervised, and unregulated. Even worse, in most countries it is almost entirely unaccounted for.
As a consequence, when formulating their budgets, most governments largely ignore the assets they own and fail to recognize that they could generated substantial yields that open up much needed fiscal space. Governments could use this headroom to kick-start growth or to buffer themselves from future shocks, without resorting to debt, exhausting existing savings, or being forced to revert to excessively painful austerity measures.
