Part E - GFS net worth

The GFS net worth is a key economic measure which represents the value of a government entity’s assets at market value at a point in time less the value of financial claims on the entity by other units. The excess of the value of assets over the value of liabilities and shares and other equity is defined as a unit’s net worth. Net worth may be positive, negative, or zero in value.

Paragraph 7.229 of the IMF GFSM 2014 states that for most government units, the net worth is the economic value of the unit because they usually have no issued shares and other equity. In the case of quasi-corporations, net worth is zero because the value of the owners’ equity is assumed to be equal to its assets minus its liabilities. Even when general government units have liabilities in the form of equity, the net worth of such government units is zero (similar to that of quasi-corporations), if these shares are not traded or the value of the shares cannot be determined independently.

The net worth at the end of a reference period less the net worth at the beginning of the period gives a measure of the change in net worth over the period. This change in net worth is made up of contributions from the following three components:

• Change in net worth due to transactions i.e. as reflected by the net operating balance;
• Change in net worth due to holding gains and losses (also known as revaluations); and
• Change in net worth due to other changes in the volume of assets.