Public assets are potential ‘goldmine’

11 Apr 19

Governments are sitting on a hidden “goldmine” of largely ignored public assets that could be used to transform development.

World Bank officials believe professional management of airports, harbours, metro systems, utilities and real estate could generate huge amounts of revenue to help achieve the Sustainable Development Goals.

The IMF Fiscal Monitor on Public Wealth estimates public assets are worth at least twice GDP, and officials say putting them to use could generate more annually than developed economies receive in corporate taxes.

World Bank adviser Marco Scuriatti and Dag Detter, author of the Public Wealth of Nations, argue that countries ultimately have the responsibility for achieving the SDGs by raising domestic revenue – but this will not be easy.

“While many countries around the world scramble to find new revenue streams, most governments are actually sitting on a virtual ‘gold mine’ - the public wealth which they don’t even know they own,” they write on the IMF blog.

“Nevertheless, most governments largely ignore these assets, and the value that could be generated from them.”

The writers point to Singapore which has unlocked its public wealth by clearly separating economic policy making and the management of public assets.

The government incorporated portfolios of assets inside public wealth funds, delegating responsibility of public commercial assets to professional managers inside holding companies.

Scuriatti and Detter suggest that the value of public real estate alone is often equivalent to a quarter of the value of the total real estate market.

It is reasonable to assume that a city could earn a 3% yield on its commercial assets if it had more professional and politically independent management, they add.

The World Bank has been discussing ways of mobilising revenues and strengthening balance sheets through professional management of public assets with countries such as Jordan, Egypt, Pakistan and Argentina.

  • Gavin O'Toole, expert on Latin America
    Gavin O'Toole

    A freelance journalist. He has written six books about Latin America and taught the politics of the region at Queen Mary, University of London.

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