Mubasher: Sovereigns in the Asia Pacific region, the Middle East and the Commonwealth of Independent States are the most exposed globally to the debt of their public sector enterprises, according to a report by Moody's Investors Service.
"After financial sector crises and natural disasters, support given to state-owned enterprises was the third most common cause of contingent liabilities materializing on a sovereign's balance sheet," said Elena Duggar, an associate managing director at Moody's.
"For a number of countries, public enterprises represent a material source of financial risk for sovereigns."
The average size of non-financial public sector debt across the sample globally was 14% of GDP at the end of 2015. This compares to an average general government debt for the same countries of 55% of GDP, the report indicated.
In China, state enterprises liabilities amounted to 114% of GDP by the end of 2015, the highest among all countries.
The research firm estimates that in China state enterprises liabilities worth 20% to 25% of GDP could potentially require restructuring a sizeable amount which would affect the sovereign's balance sheet.
In the Middle East and Africa region, the public sector liabilities were highest in Dubai (74% of GDP), Qatar (41%), and Kazakhstan (30%), the report indicated.
The average levels for Western and Eastern Europe are at 12% and 9% of GDP respectively.
North America has the lowest public enterprises debt levels, with non-financial public sector debt at 0.1% of GDP in the US and 8% of GDP in Canada.
