Public Commercial Asset
- Dag Detter
- Jan 2020
- Asian Development Bank (ADB)
- International
The monetization of public assets generates receipts that can be used to pay down existing debt, to reduce the need for new debt, or to build the government’s financial buffers. Outcomes such as a reduction in the government debt stock or a slowdown in its pace of accumulation and an
increase in government financial assets directly improve key metrics in the sovereign rating models of the three global rating agencies, thereby resulting
in better ratings. However, even without privatization, better management of government assets is likely to yield positive quantitative and qualitative impacts
that eventually provide an uplift to the sovereign rating or provide a buffer against a downgrade. To the extent that better management of public
assets leads to improved delivery of public goods and services to the citizenry and is perceived by the rating agencies to enhance trust between the public and the government, this would further serve to improve their assessments of governance and institutional strength, which are components in their rating models.
