Perspectives 2019 2020 Public Sector

Citi Perspectives 55 Dag Detter Principal, Detter & Co David Walker Head of EMEA Public Sector, Citi Laura Gibson EMEA Public Sector, Citi Hanan Amin-Salem Global Public Sector, Citi Impact on the sovereign rating Lastly, improved management of government assets may also have a positive impact on a country’s sovereign credit rating, which affects its cost of borrowing. Clearly, the monetization of public assets generates receipts that can be used to pay down existing debt, to reduce the need for new borrowing or to build the government’s financial buffers. A reduction in a government’s debt load, or slowdown in its pace of accumulation, and an increase in government financial assets directly improve key metrics the three global rating agencies use in their sovereign rating models. In addition to assisting sovereign credit ratings, more efficiently managed assets would contribute to a higher rate of real GDP growth, generate dividends or other cash flows for the government budget, and lower operating costs, all a major benefit to society. To many developing countries around the world, the stability and wealth of Singapore might appear unachievable. But simply by looking at public commercial assets in a fresh way and putting in place the structures for professional, independent management, all countries have the potential to optimize the value of these assets to the benefit of the economy and all citizens. It is almost 60 years since Singapore and Jamaica gained independence and set off on starkly different development tracks; there is no reason why Jamaica cannot pull level with Singapore in the decades to come. A reduction in a government’s debt load, or slowdown in its pace of accumulation, and an increase in government financial assets directly improve key metrics the three global rating agencies use in their sovereign rating models.