Financial position of governments in major advanced economies (2013)

Gross general government debt is the most frequently used measure to compare public debt across countries. The general government sector includes the central, state and local governments, including social security funds. On this measure, Japan has the most highly indebted government in the world among the advanced economies with a debt-to-GDP ratio that is rapidly approaching 250% of GDP. A quite different picture emerges if general government and central bank liabilities are consolidated and assets are netted. This translates into government net financial worth. On this measure, Japanese debt is only 100% of GDP. Net financial worth does not take into account the assets and liabilities of state-owned enterprises nor government equity holdings in publicly-traded companies. Here it worth noting that the gross debt of government-related enterprieses amounts to a mere 13% of GDP in Japan, compared to 52% of GDP in the US. Net financial worth also fails account for non-financial assets owned by the government such as as land, buildings and structures. As of 2010, these were equivalent to 120% of GDP in Japan, compared to 66% of GDP in the US. Last but not least, Japan’s implicit liabilities (aka NPV value of projected increases in pension- healthcare spending during 2011-50 is a mere 34% of GDP, compared to 210% of GDP in the US. The Japanese government’s position does not compare too badly, after all. Naturally, the deterioration of the government’s financial position at the margin (aka fiscal deficits) is of concern and needs to be tackled sooner or later.

Government assets & liabilities (% of GDP)
Source: IMF