How Do Countries Use an Asset and Liability Management Approach? A Survey on Sovereign Balance Sheet Management

Cangoz, Mehmet Coskun and Boitreaud, Sebastien and Dychala, Christopher Benjamin (2018): How Do Countries Use an Asset and Liability Management Approach? A Survey on Sovereign Balance Sheet Management. Published in: Policy Research Working Paer , Vol. 1, No. WPS8624

Abstract

This paper summarizes and discusses the results of a survey on country practices in the management of sovereign assets and liabilities. Twenty-eight countries, mostly high-income economies, responded to the questionnaire. The survey responses provide detailed information about various approaches to the sovereign asset and liability management framework in terms of balance sheet production as well as objectives, priority areas, and challenges associated with integrated management. In addition to the survey results, where possible and relevant, this paper provides insight through prominent country examples. The survey results confirm that the number of countries that have developed such a framework is limited. Although most of the respondents indicated that they regularly produce an accounting balance sheet, the objective of this exercise is often limited to monitoring sovereign assets and liabilities rather than determining mismatches between them. In the cases where a sovereign asset and liability management framework is implemented, there are significant differences across countries. Most countries include state-owned enterprises in the sovereign balance sheet, but only a minority also considers central banks, in some cases only international reserves and sovereign funds. The challenges cited include institutional arrangements, uncertain or lacking mandate, coordination between institutions, data availability, and valuation of assets. Most of these challenges are related to the implementation of the approach. The development of sound practices for sovereign asset and liability management could benefit governments and facilitate the implementation of a holistic approach to manage their balance sheets and related risks, increasing their resilience to shocks.

• Item Type: MPRA Paper
• Language: English
• Keywords: Asset and Liability Management, Public Debt, Sovereign Balance Sheet
• Subjects: F - International Economics > F3 - International Finance > F34 - International Lending and Debt Problems; G - Financial Economics > G1 - General Financial Markets > G12 - Asset Pricing ; Trading Volume ; Bond Interest Rates; G - Financial Economics > G1 - General Financial Markets > G13 - Contingent Pricing ; Futures Pricing; G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation; H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt ; Debt Management ; Sovereign Debt

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