Managing Public Wealth Vienna, Austria, November 21-22, 2019 - PowerPoint PPT Presentation

Managing Public Wealth Vienna, Austria, November 21-22, 2019 Alexander Tieman Fiscal Affairs Department International Monetary Fund PULSAR Program is co-funded by: Public Sector Accounting and Reporting Program

2

3 Intertemporal Public Sector Balance Sheet Public Sector Balance Sheet General Government Balance Sheet Assets/Inflows Liabilities/Outflows Assets Liabilities Assets Liabilities Financial Assets Debt Financial Assets Debt Financial Assets Debt Increase Add Time Coverage Non-Financial Dimension Non-Financial Non-Financial Past Non-debt Non-debt Non-debt Assets Assets Assets Public Corp Public Corp SOE Assets SOE Liabilities Assets Liabilities Future Future Revenues Future Spending

4 Aggregate Public Sector Balance Sheet (in percent of GDP) Assets Liabilities Financial GG Debt Assets 94 % 97 % US$103 Trillion 195 percent of GDP or Pension Liabilities 216 percent of GDP Infrastructu 46 % re 71 % Others 56 % Natural Resources 37 % Net Worth 21 % Others 11 % 4 Source: IMF Public Sector Balance Sheet Database.

5 5

6 Accrued Pension Liabilities Public Corporation Assets Natural Resource Assets (Percent of GDP) (Percent of GDP) (Percent of GDP) Senegal Malta Uzbekistan Armenia North Macedonia North Macedonia Guatemala Armenia Kazakhstan North Macedonia Gambia, the Albania Mexico El Salvador Indonesia Malta France Russian Federation Kenya Japan Georgia Lithuania Korea Lithuania Tanzania Austria New Zealand Uganda Germany Guatemala El Salvador New Zealand Mexico Canada Portugal India Austria Uganda Canada Peru Finland Colombia Albania Kenya Gambia, The Gambia, the United Kingdom El Salvador Georgia Turkey Tunisia Australia United States Malta Colombia Guatemala Uganda Indonesia Georgia Kenya New Zealand Senegal Turkey Finland Mexico Peru Turkey Senegal Albania United Kingdom Japan India France Australia Tanzania India Canada Tanzania Kazakhstan Lithuania South Africa Germany Korea, Republic of Colombia Korea, Republic of Uzbekistan Tunisia Armenia United States Indonesia France Brazil Brazil United States Norway South Africa Austria South Africa Uzbekistan Brazil Norway Russian Federation United Kingdom Australia Tunisia Norway Peru Germany Finland Kazakhstan Portugal Portugal Russia Japan 6 0 50 100 150 0 100 200 300 0 50 100 150 200 250 300 6 Source: IMF Public Sector Balance Sheet Database

→ 7 Distribution of Annual Returns from Public Corporations Potential Revenue Gains from Improved Asset Management (Percent Return on Assets) (in percent of GDP) 40 6 Median = 0.6 percent Current returns 35 Potential Improvement 5 30 4 Percent of GDP 25 3 20 3 2 15 2 10 1 5 1 0 0 <-4 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 >10 Non-financial public Government financial Total corporations assets Source: IMF October 2018 Fiscal Monitor. 7 New Zealand case study 7

→ 8 Real GDP per Capita Real Government Expenditure per Capita Following Recessions Following Recessions 12 40 9 30 Percentage change Percentage change 6 20 3 10 0 0 -3 -10 -6 -20 0 1 2 3 4 5 0 1 2 3 4 5 Year Year Strong Balance Sheets Weak Balance Sheets Source: IMF October 2018 Fiscal Monitor. Note: Shaded area represents 90 percent confidence interval. 8 Kazakhstan case study 8

9 UK – Public Sector Balance Sheet (percent of GDP) 400 Assets 300 Financial public 200 corporations assets Other assets 100 0 Net Worth Liabilities -100 Financial public -200 corporations liabilities -300 Pension liabilities Evolution since -400 Other liabilities the crisis 2000 02 04 06 08 10 12 14 16 9 Source: October 2018 Fiscal Monitor 9

10 US public sector balance sheet Fiscal stress scenario - 2020 (percent of GDP) (percent of baseline GDP) 250 0 200 150 -10 100 50 -20 0 -50 -30 -28 -100 -150 -40 -200 2000 2002 2004 2006 2008 2010 2012 2014 2016 -50 -54 -60 Baseline Debt Nonfinancial GSEs: loan Pension Other Stress assets losses funds Source: October 2018 Fiscal Monitor 10 10

11 Public Sector Balance Sheet Change in Intertemporal Net Worth from Higher Investment (percent of GDP) (percent of 2023 baseline GDP) 0 250 Assets Net worth -2 Financial assets 200 Postive changes in net worth -4 Fixed assets 150 -6 Other nonfinancial assets -8 100 Natural resources -10 50 Net worth -12 Liabilities 0 -14 Other liabilities -16 -50 -18 Debt securities and loans -100 -20 2010 11 12 13 14 15 16 Currency/deposits Baseline net worth Change in net assets Change in future Scenario net worth primary balances Source: October 2018 Fiscal Monitor 11 11

12 Static and Intertemporal Net Worth (percent of GDP) 800 Static Intertemporal Intertemporal 600 Component 400 Natural resources 410 ppt 101 ppt 200 Other assets 0 Liabilities -200 (Intertemporal) net -400 worth Construction of -600 intertemporal Norway Finland Norway Finland 12 balance sheet 12 Source: October 2018 Fiscal Monitor

13 Thank You Public Sector Balance Sheet Database data.imf.org/psbs Managing Public Wealth IMF October 2018 Fiscal Monitor www.imf.org/en/publications/fm 13

14 Background Slides 14

→ 15 Source: IMF October 2018 Fiscal Monitor. 15 15

16 Public Sector Balance Sheet (Weighted average of 17 countries, percent of GDP) Assets and Liabilities Net (Financial) Worth 200 -20 45 190 -25 40 180 -30 35 Net Worth 170 -35 30 (right scale) 160 Assets -40 25 $11 150 Trillion -45 20 140 -50 15 130 -55 10 Liabilities 120 Net Financial Worth -60 5 110 (left scale) -65 0 100 2000 2002 2004 2006 2008 2010 2012 2014 2016 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source: IMF Fiscal Monitor, October 2018. Back to UK slide 16 16 Note: The data excludes natural resource assets and pension liabilities.

17 EM: Levels of Public and Private Debt EM: General Government Balance Sheets (percent of GDP) (percent of GDP) 250 250 Global Financial Asian Financial 200 Crisis Financial assets Nonfinancial assets Liabilities Net worth Net financial worth Crisis 200 150 150 Private Debt 100 100 Public Debt 50 50 0 0 -50 -50 -100 -100 -150 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 -150 Barbados* Gambia, The Brazil El Salvador India* Poland Ukraine Palau* Guatemala Albania Kyrgyz Republic Serbia Turkey Uganda Colombia Indonesia Kenya Uruguay Tanzania Croatia Marshall Islands Hungary Peru Moldova South Africa Malawi Bulgaria Georgia Russia Romania Kazakhstan Micronesia* China Sources: IMF Global Debt Database and October 2018 Fiscal Monitor 17 17

18 Public Debt Holdings PSBS – US and Japan (percent of GDP) (2016, percent of GDP) Japan United States 350 350 300 180 164 283 160 250 300 Nonfinancial Assets 149 140 Public 200 250 54 120 150 Public 200 100 110 100 150 80 Financial Assets 134 50 60 100 Private 0 40 Private Net Worth 50 -50 20 0 GG Debt 0 Liabilities ex Pensions -100 2000 2002 2004 2006 2008 2010 2012 2014 2016 2001 2004 2007 2010 2013 2016 -150 -200 GG Debt -250 Pension Liabilities -300 -350 United States Japan 18 18 Sources: IMF October 2018 Fiscal Monitor, US Federal Reserve, and Bank of Japan

19 United Kingdom: Maturity Structure of Outstanding Debt, 2016 1.8 1.6 1.4 1.2 £ Trillion 1 Over 10 years Up to 10 years 0.8 Up to 5 years 0.6 < 1 year 0.4 0.2 0 Central Government Debt Public Sector Debt Sources: Office for Budget Responsibility, Bank of England, UK Debt Management Office 19 19

20 Gross Financing Needs under Stress The Gambia: Public Sector Balance Sheet (percent of GDP) (percent of GDP) 60 Central Public Public 2016 Government Corporations Sector Stress 50 Total assets 47.3 61.9 61.0 of which: Nonfinancial assets 13.4 22.4 35.8 40 Financial assets 33.9 39.4 25.2 Total liabilities 93.5 61.9 107.2 30 of which: Debt securities 78.4 2.0 61.4 Net financial worth -59.5 -22.4 -82.0 20 Net worth Baseline -46.2 0.0 -46.2 Source: IMF staff estimates 10 0 2006 08 10 12 14 16 18 20 Source: IMF staff estimates. 20 20

21 Kazakhstan: Public Sector Balance Sheet Kazakhstan: Evolution of Net Worth (percent of GDP) (percent of 2016 GDP) 350 General Public Public Government Corporations Sector 300 Total assets 348.6 99.9 399.0 of which: Nonfinancial assets 263.4 27.3 290.7 250 Financial assets 85.2 72.6 108.3 Total liabilities 16.9 99.9 67.2 200 of which: Debt securities 11.5 8.9 10.5 Net financial worth 68.3 -27.3 41.0 150 Net worth 331.7 0.0 331.7 Source: IMF staff estimates 100 Net worth Negative changes to net worth 50 Positive changes to net worth 0 2013 Net Deficit Oil price Depletion Currency 2016 Net worth worth Back to Recession Slide 21 21