Welcome to another episode of Patterns and Stories. Joining us today is Dag Detter, a Swedish author and investment advisor who has led the restructuring of the government portfolio of public assets during the reforms of 1998-2001 as the former President of Stattum and Director at the Swedish Ministry of Industry.
We are your hosts, Luca Dellanna and Ismail Manik.
The AI-generated transcript was lightly edited for grammar and fluency.
Selected highlights
* “We have done the valuation of the assets in Sri Lanka, and it turned out that they are significantly higher than the debt. So the country is actually, as presumed, extremely rich, but it is not using those assets; it's not managing the assets properly. And before we did the valuation, the finance minister in the President didn't even know that they had these assets. So, there are enormous opportunities to manage the assets better and to have a yield and non-tax revenues from them.”
* “In a government, they have more assets, the assets are more valuable than all the debt [… but] if we only look at the debt, we will always think that we are poor and we don't have resources to invest for the future, for the next generation. So we are basically starving society of investments. And more importantly, if we are only looking at the debt, we are not making a differentiation between whether we are borrowing money to invest in important things like infrastructure, housing, and those things that could generate revenue and could benefit society. We're also not doing maintenance. […] Because of poor accounting and poor asset management in the public sector, we have a lot of derelict infrastructure. […] If you don't recognize, if you don't see your assets, you will not manage them because you don't see them. You can't manage what you don't see. And if you don't see it, you will not invest because you can't see that it's derelict.”
* “The Minister of Finance in a local government, state government, or national government should be producing financial statements, if not monthly, at least quarterly, and they should be timely so they're not lagging in time because
The issue with financial statements is not so much transparency, which is often talked about. Financial statements are the numbers, the data that you have for making wise decisions. So, having them produced too late is no use for the politicians or any other stakeholders to actually be able to make
proper decisions. For instance, in New Zealand, which is the prime example in this regard, they have monthly statements, which allow them to take timely and proper decisions with accurate data.”
* “The second myth in public finance is that accrual accounting is difficult, time-consuming, and expensive. All three are myths, and you should get rid of them as soon as possible because accrual accounting is not rocket science. It's done in the private sector every day. It's done by private individuals. […] It doesn't take a very long time to do, which is proven by New Zealand [and] other countries. And it's not very costly. When people refer to the cost, they often are referring to the fact that they need to change an IT system, which they will have to do anyway. And that cost is absolutely marginal compared to the revenues, the non-tax revenues, and that you can generate from better management and from understanding your finances better, but also from limiting the fiscal risk that you have by not having proper accounting.”
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