Archive for August, 2012

When does government debt matter?

August 24, 2012

Individuals and corporations publish income statements and balance sheets. Governments publish budgets showing expected income and expenditures for the forthcoming fiscal year but not balance sheets showing assets and liabilities. Gross government debt is reported showing domestic and foreign owned liabilities of different maturities, and debt owed by foreigners to Canadians allows for the calculation of whether net debt is positive or negative. But there is no comprehensive listing of government owned assets such as land, buildings and equipment. I suspect these assets are substantial when one considers the land which constitutes areas like the Banff National Park in Canada. Of course there would be an outcry if such a national treasure was privatized, but from time to time governments sell off military bases and equipment with the funds used to reduce outstanding government liabilities.

My question is what do we actually know about the government’s financial circumstances when there are so many assets to account for, and probably liabilities as well? Any clarification would be appreciated.