For example, Dominica suffered 216% GDP of weather-related damage in 2017, Thailand 12% in 2011 and Kerala 2.6% GDP in 2018, according to the damage assessments. The growing frequency and severity of climate disasters are causing crippling damage and losses. This gap in information makes it harder for governments to cope with climate-related extreme weather events. Accurate data on the condition of public infrastructure and the need for maintenance can help avoid under-budgeting and the deterioration of public assets. For example, new vocational training centers are being build when neighboring primary schools are closing for lack of pupils due to an aging population or expensive new infrastructure are being built where there is no demand (the famous white elephants) when existing bridges threaten to collapse.
The qualitative assessments suggest that among the different types of public assets, most efforts are being put into registering land assets, including for legal and taxation reasons.Ĭountries without a comprehensive and up-to-date asset registry face challenges with planning and project selection, as there is no feedback loop that could inform prioritization or optimization of scarce public investments. Moreover, PEFA only focused on the largest projects. Less than 10 percent of PEFA’s suggest tangible assets in financial reports, most probably for lack of comprehensive and current data on such assets. Even where information systems on public investment projects or assets exist, the quality of data may be lacking. Only in one third of the cases (17 of 52) were the flow and stock tracking ratings consistent. It was only in 2015/ 2016 that such global diagnostic tools like the new Public Expenditure and Financial Accountability (PEFA) framework or dedicated Public Investment Assessments started looking at how national and sub-national Governments track their assets. Let’s take a closer look.ĭevelopment partners, credit rating agencies and investors were keen to assess strength of countries’ public financial management but until recently didn’t pay much attention to public investment and asset management. A true picture of financial accounting must include government’s main assets and liabilities and those of their State-Owned Enterprises.īut do countries know what they own? Not just what they owe? Recent diagnostics suggest they don’t. At a time of growing unease over indebtedness in developing countries, it is more important than ever that governments understand and report on the quality of their investment projects, as well as the state of physical assets in the form of bridges, roads, clinics, or schools. All things being equal, a homeowner with a house in good repair in a desirable neighborhood can get a bigger loan at a lower interest rate than someone whose building needs a new roof in a run-down location.Ĭountries are also judged by the quality of their assets and whether public investments strengthen prospects for sustainable economic growth. The quality of those assets makes all the difference. When thinking about financial health of a company, or even a household, we know it’s important to understand their assets and liabilities.
“In God we trust, all others must bring data.” – W. "If you can’t measure it, you can’t improve it." – Peter Drucker (Management Consultant)
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