Financial Capital in Ethiopia, Indonesia, and Trinidad and Tobago

Trends and policy implications

Like other assets of the comprehensive wealth portfolio, financial capital can be used to support a country's long-term prosperity. When foreign financial assets exceed liabilities, financial capital increases the stock of wealth. Like a savings account, these financial resources can be used for economic, social, and environmental projects to support the well-being of current and future generations.

  • Except for Indonesia, financial capital contributes positively to total wealth in all countries. However, Trinidad and Tobago and Ethiopia began accumulating more liabilities than assets toward the end of the study period.

  • The accumulation of financial liabilities does not pose a threat to long-term well-being so long as they are well managed to optimize future returns.

  • For greater financial resilience, the sources of debt financing should be diversified, particularly in Trinidad and Tobago.

This policy brief examines trends in financial capital in Ethiopia, Indonesia, and Trinidad and Tobago from 1995 to 2020 as part of a larger study on each country's comprehensive wealth index. After reviewing the data, the authors offer policy recommendations touching on:

  • governance and accountability
  • public debt management
  • diversification of financing sources
  • managing domestic financial capital