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

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PULSAR Program is co-funded by:

Public Sector Accounting and Reporting Program

Managing Public Wealth

Vienna, Austria, November 21-22, 2019 Alexander Tieman

Fiscal Affairs Department International Monetary Fund

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Assets Liabilities Financial Assets Debt Non-Financial Assets Non-debt General Government Balance Sheet Assets Liabilities Financial Assets Debt Non-Financial Assets Non-debt SOE Assets SOE Liabilities Public Sector Balance Sheet

Increase Coverage

Assets/Inflows Liabilities/Outflows Financial Assets Debt Non-Financial Assets Non-debt Public Corp Assets Public Corp Liabilities Future Revenues Future Spending Intertemporal Public Sector Balance Sheet

Past Future Add Time Dimension

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Aggregate Public Sector Balance Sheet (in percent of GDP)

Assets Liabilities

US$103 Trillion

r

216 percent of GDP 195 percent of GDP

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Source: IMF Public Sector Balance Sheet Database.

GG Debt 94 %

Pension Liabilities 46 % Others 56 %

Financial Assets 97 %

Infrastructu re 71 % Natural Resources 37 %

Others 11 %

Net Worth 21 %

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Source: IMF Public Sector Balance Sheet Database

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Public Corporation Assets (Percent of GDP)

50 100 150 200 250 300

Japan Portugal Germany Tunisia Russian Federation South Africa Norway Brazil United States Uzbekistan Korea, Republic of Kazakhstan India France United Kingdom Turkey Finland New Zealand Indonesia Colombia Australia Georgia Gambia, the Albania Peru Austria Canada El Salvador Uganda Tanzania Lithuania Kenya Malta Mexico North Macedonia Guatemala Armenia Senegal

Accrued Pension Liabilities (Percent of GDP)

100 200 300

Russia Kazakhstan Peru Australia Norway Uzbekistan South Africa Brazil Indonesia Tunisia Colombia Lithuania Canada Tanzania India Albania Mexico Senegal Georgia Guatemala United States Turkey United Kingdom Kenya Finland Uganda Portugal New Zealand Germany Austria Korea Japan France El Salvador Gambia, the Armenia North Macedonia Malta

Natural Resource Assets (Percent of GDP)

50 100 150

Portugal Finland Norway United Kingdom Brazil Austria United States France Armenia Korea, Republic of Germany South Africa Tanzania Australia Japan Senegal Peru Turkey Kenya Uganda Malta Tunisia El Salvador Gambia, The Colombia Canada India Mexico Guatemala New Zealand Lithuania Georgia Russian Federation Indonesia Albania Kazakhstan North Macedonia Uzbekistan

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Potential Revenue Gains from Improved Asset Management (in percent of GDP)

Source: IMF October 2018 Fiscal Monitor.

Distribution of Annual Returns from Public Corporations (Percent Return on Assets)

5 10 15 20 25 30 35 40

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4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 >10

Median = 0.6 percent

1 2 3 4 5 6 Non-financial public corporations Government financial assets Total Percent of GDP Current returns Potential Improvement

1 2 3 7

New Zealand case study

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Kazakhstan case study

Real GDP per Capita Following Recessions

Source: IMF October 2018 Fiscal Monitor. Note: Shaded area represents 90 percent confidence interval.

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10

10 20 30 40 1 2 3 4 5 Percentage change Year

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3

3 6 9 12 1 2 3 4 5 Percentage change Year

Real Government Expenditure per Capita Following Recessions

Strong Balance Sheets Weak Balance Sheets

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400
300
200
100

100 200 300 400 2000 02 04 06 08 10 12 14 16

Other assets Financial public corporations assets Financial public corporations liabilities Pension liabilities Other liabilities Net Worth Assets Liabilities

UK – Public Sector Balance Sheet (percent of GDP)

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Source: October 2018 Fiscal Monitor

Evolution since the crisis

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US public sector balance sheet (percent of GDP)

200
150
100
50

50 100 150 200 250 2000 2002 2004 2006 2008 2010 2012 2014 2016

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28
54
60
50
40
30
20
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Baseline Debt Nonfinancial assets GSEs: loan losses Pension funds Other Stress

Fiscal stress scenario - 2020 (percent of baseline GDP)

Source: October 2018 Fiscal Monitor

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100
50

50 100 150 200 250 2010 11 12 13 14 15 16

Natural resources Other nonfinancial assets Fixed assets Financial assets Other liabilities Debt securities and loans Currency/deposits Net worth

Assets Liabilities

Public Sector Balance Sheet (percent of GDP) Change in Intertemporal Net Worth from Higher Investment (percent of 2023 baseline GDP)

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18
16
14
12
10
8
6
4
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Baseline net worth Change in net assets Change in future primary balances Scenario net worth

Net worth Postive changes in net worth Source: October 2018 Fiscal Monitor

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Static and Intertemporal Net Worth (percent of GDP)

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Source: October 2018 Fiscal Monitor

600
400
200

200 400 600 800 Norway Finland Norway Finland Intertemporal Component Natural resources Other assets Liabilities (Intertemporal) net worth

410 ppt 101 ppt

Static Intertemporal

Construction of intertemporal balance sheet

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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

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Background Slides

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Source: IMF October 2018 Fiscal Monitor.

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Public Sector Balance Sheet (Weighted average of 17 countries, percent of GDP)

$11

Trillion

Source: IMF Fiscal Monitor, October 2018. Note: The data excludes natural resource assets and pension liabilities.

100 110 120 130 140 150 160 170 180 190 200 2000 2002 2004 2006 2008 2010 2012 2014 2016 Assets Liabilities 5 10 15 20 25 30 35 40 45

65
60
55
50
45
40
35
30
25
20

2000 2002 2004 2006 2008 2010 2012 2014 2016 Net Worth (right scale) Net Financial Worth (left scale)

Assets and Liabilities Net (Financial) Worth

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Back to UK slide

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150
100
50

50 100 150 200 250 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Private Debt Public Debt Asian Financial Crisis Global Financial Crisis

150
100
50

50 100 150 200 250 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 Financial assets Nonfinancial assets Liabilities Net worth Net financial worth

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Sources: IMF Global Debt Database and October 2018 Fiscal Monitor

EM: General Government Balance Sheets (percent of GDP) EM: Levels of Public and Private Debt (percent of GDP)

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PSBS – US and Japan (2016, percent of GDP)

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50 100 150 200 250 300 350 2000 2002 2004 2006 2008 2010 2012 2014 2016

Private Public

149 134 283

20 40 60 80 100 120 140 160 180 2001 2004 2007 2010 2013 2016

Public Private

54 110 164

Public Debt Holdings (percent of GDP) Japan United States

Sources: IMF October 2018 Fiscal Monitor, US Federal Reserve, and Bank of Japan

350
300
250
200
150
100
50

50 100 150 200 250 300 350

United States Japan

Nonfinancial Assets Financial Assets Liabilities ex Pensions Pension Liabilities GG Debt GG Debt Net Worth

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0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8

Central Government Debt Public Sector Debt

£ Trillion

Over 10 years Up to 10 years Up to 5 years < 1 year

Sources: Office for Budget Responsibility, Bank of England, UK Debt Management Office

United Kingdom: Maturity Structure of Outstanding Debt, 2016

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The Gambia: Public Sector Balance Sheet (percent of GDP) Gross Financing Needs under Stress (percent of GDP)

2016 Central Government Public Corporations Public Sector Total assets

47.3 61.9 61.0

f which: Nonfinancial assets

13.4 22.4 35.8

Financial assets

33.9 39.4 25.2

Total liabilities

93.5 61.9 107.2

f which: Debt securities

78.4 2.0 61.4

Net financial worth

59.5
22.4
82.0

Net worth

46.2

0.0

46.2

Source: IMF staff estimates

10 20 30 40 50 60 2006 08 10 12 14 16 18 20

Baseline Stress

Source: IMF staff estimates. 20

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Kazakhstan: Public Sector Balance Sheet (percent of GDP)

General Government Public Corporations Public Sector Total assets

348.6 99.9 399.0

f which: Nonfinancial assets

263.4 27.3 290.7

Financial assets

85.2 72.6 108.3

Total liabilities

16.9 99.9 67.2

f which: Debt securities

11.5 8.9 10.5

Net financial worth

68.3

27.3

41.0

Net worth

331.7 0.0 331.7

Source: IMF staff estimates 50

100 150 200 250 300 350 2013 Net worth Deficit Oil price Depletion Currency 2016 Net worth

Net worth Negative changes to net worth Positive changes to net worth

Kazakhstan: Evolution of Net Worth (percent of 2016 GDP)

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Back to Recession Slide

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10 20 Total Shareholder Return (LHS) Return on Capital Employed (LHS) Net profit (RHS) 2013 2017

New Zealand: Public Sector Balance Sheet (percent of GDP) Assets Liabilities Net Worth Social

57.5 7.1 50.5

Financial

33.2 50.5

17.3

Commercial

20.1 12.0 8.1

Static balance sheet

110.8 69.5 41.3

Fiscal

1,381.9 1,480.0

98.1

Intertemporal balance sheet

1,492.7 1,549.5

56.8

Source: New Zealand 2017 Investment Statement. New Zealand: Financial Highlights – Commercial Priority Companies

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Back to Assets Slide

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General Government Public Corporations Public Sector Total assets

208.9 75.2 254.1

f which: Nonfinancial assets

80.2 10.4 90.6

Financial assets

128.7 64.8 163.5

Total liabilities

178.6 75.2 223.8

f which: Debt securities

54.1 13.7 57.2

Net Financial Worth

49.9
10.4
60.3

Net Worth

30.3 0.0 30.3

Net present value of primary balances

83.3

Intertemporal net worth

113.6

Source: IMF staff estimates. 30 35 40 45 50 55 60

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4 8 12 16 20 2005 2015 2025 2035 2045 2055 2065

Primary palance (left scale) Primary expenditure (right scale) Revenue (right scale)

Finland Long-term Fiscal Projections (percent of GDP) Finland Intertemporal Balance Sheet, 2016 (percent of GDP) Back to Norway – Finland example

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