Financial net worth of general government

The analysis of the difference between the financial assets and liabilities held by governments (also known as financial net worth or as a broad description of net government debt), gives an extensive measure of the government’s capacity to meet its financial obligations. While the assets reflect a source of additional funding and income available to government, liabilities reflect the debts accumulated by government. Thus, a consistent increase in the government’s financial net worth over time indicates good financial health. Conversely, net worth may be depleted by debts accumulated by government, indicating a worsening of fiscal position and ultimately forcing governments to either cut spending or raise taxes.