This indicator assesses the management and monitoring of government assets and the transparency of asset disposal. It contains the following three dimensions and uses the M2 (AV) method for aggregating dimension scores:

• Dimension 12.1. Financial asset monitoring

• Dimension 12.2. Nonfinancial asset monitoring

• Dimension 12.3. Transparency of asset disposal


The effective management of assets supports aggregate fiscal discipline by ensuring that resources owned and controlled by government are used efficiently and effectively in the implementation of policy objectives. If governments do not have sufficient knowledge of the existence and application of assets, it is possible that the assets are not being used effectively and may not be properly applied. Governments also need to be aware of assets that are not needed, or not fully utilized, so that they can make timely decisions on whether the assets should be transferred to other users or exchanged for different assets of greater value for service delivery or other policy implementation.


12:1. Assets are resources controlled by a government entity as a result of past events from which future economic benefits are expected to flow.

12:2. Assets are classified under GFS 2014 and other classifications as either financial or nonfinancial. Financial assets can be very diverse, including cash, securities, loans, and receivables owned by the government. They may also include foreign reserves and long-term funds such as sovereign wealth

funds and equity in state-owned and private sector institutions. Financial assets can also consist of financial claims and gold bullion held by monetary authorities as a reserve asset. A financial claim is an asset that typically entitles the owner of the asset (the creditor) to receive funds or other resources from another unit, under the terms of a liability (GFS Manual 2014, page 403). It is important that a country has systems for managing, monitoring, and reporting on financial assets, including robust risk management frameworks where necessary, and appropriate governance and transparency arrangements.

12:3. Every economic asset other than financial assets is classified as a nonfinancial asset (GFS Manual 2014, page 409). Recognizing nonfinancial asset values and economic potential is important for a variety of PFM processes, including assessing the financial position of government, determining the requirement for future capital investment, maximizing the return on investments, and ensuring efficient utilization of resources.

12:4. Nonfinancial assets may arise as outputs of a production process, may occur naturally, or may be constructs of society. Nonfinancial assets usually provide benefits either through their use in the production of goods and services or in the form of property income. The most valuable nonfinancial assets of many countries are subsoil mineral resources such as oil, gas, diamonds, or precious or industrial metals. Non-financial assets are further subdivided into those that are produced (fixed assets, inventories, and valuables) and those that are non-produced (land, mineral and energy resources, other naturally occurring assets, and intangible non produced assets) (GFS Manual 2014, para 3.50).


Pillar Three: Management of Assets and Liabilities