Measurement guidance
Assets are resources controlled by a government entity as a result of past events from which future economic benefits are expected to flow. Assets are classified under GFS 2014 and other classifications as either financial or nonfinancial. Financial assets can be very diverse, including cash, securities, loans, and receivables owned by the government. They may also include foreign reserves and long-term funds such as sovereign wealth funds and equity in state-owned and private sector institutions. It is important that a country has systems for managing, monitoring, and reporting on financial assets, including robust risk management frameworks where necessary, and appropriate governance and transparency arrangements.
Every economic asset other than financial assets is classified as a nonfinancial asset. Recognizing nonfinancial asset values and economic potential is important for a variety of PFM processes, including assessing the financial position of government, determining the requirement for future capital investment, maximizing the return on investments, and ensuring efficient utilization of resources. Nonfinancial assets may arise as outputs of a production process, may occur naturally, or may be constructs of society.
Nonfinancial assets usually provide benefits either through their use in the production of goods and services or in the form of property income. The most valuable nonfinancial assets of many countries are subsoil mineral resources such as oil, gas, diamonds, or precious or industrial metals. A list of categories of nonfinancial assets is provided in table 3 below to guide the assessment of dimension 12.2. The assessment should be clear about which categories are included for the purposes of this indicator and the reasons for any exclusions. It should include comments on the mechanisms used to capture information. The narrative should also comment on the completeness of the data inserted in the table and should indicate which entities own or administer the assets.
TABLE 3: Categories of nonfinancial assets
| Categories | Subcategories | Where captured | Comments |
|---|---|---|---|
| Fixed assets | Buildings and structures | ||
| Machinery and equipment | |||
| Other fixed assets | |||
| Inventories | - | ||
| Valuables | - | ||
| Nonproduced assets | Land | ||
| Mineral and energy resources | |||
| Other naturally occurring assets | |||
| Intangible nonproduced assets |
Note: The categories in the table are based on the GFS 2014, but different categories applied by the government may be used.
Dimension 12.1 assesses the nature of financial asset monitoring, which is critical to identifying and effectively managing the key financial exposures and risks to overall fiscal management. The rating criteria use the term “performance” to refer to the return on invested capital in the form of dividends, interest, and capital appreciation or loss, rather than any specific target
