Consultation on Revisions to the Code of Good Practices on Fiscal Transparency
Last Updated: February 11, 2013
The IMF is seeking your comments on the revision of its Code of Good Practices on
Fiscal Transparency and related instruments. The on-line consultation process is open until February 10, 2013. We would welcome your input. If you have any comments/questions, please send an e-mail to IMFconsultation@imf.org.
iscal transparency – defined as the clarity, reliability, timeliness, and relevance of public fiscal reporting and the openness to the public of government’s fiscal policy-making process - is a critical element of effective fiscal policymaking and risk management. Without comprehensive, reliable and timely fiscal information, governments cannot understand the fiscal risks they face or make good budget decisions. If citizens don’t have access to this information, they cannot hold governments accountable for those decisions.
The IMF has for many years sought to improve fiscal transparency among member countries and, since the late 1990s, it has had the mandate to set standards for fiscal transparency. First published in 1998, the IMF’s Code of Good Practices on Fiscal Transparency and accompanying Manual on Fiscal Transparency represented the first comprehensive set of principles, norms, and guidance for countries seeking to improve fiscal disclosure. The Code and Manual were revised in 2007 and supplemented by an additional Guide on Resource Revenue Transparency which applies the Code’s principles to the unique set of issues faced by countries with substantial oil and mineral resources. Since 1999, the IMF has assessed the compliance with the principles and practices set out in the Code and Manual for 94 member countries and has published fiscal ROSCs (Reports on the Observance of Standards and Codes).
The IMF’s recent policy paper, Fiscal Transparency, Accountability, and Risk, reviews the state of fiscal transparency in the wake of the recent global financial crisis and proposes a series of improvements to existing international fiscal transparency standards and monitoring arrangements. The paper finds that despite a steady improvement in fiscal reporting practices over the past decade, governments still have an inadequate understanding of their underlying fiscal position and the risks to that position, as demonstrated by the emergence of previously unreported fiscal deficits and debts, as well as the crystallization of large, mainly implicit, government liabilities to the financial sector during the current crisis. These shortcomings in fiscal disclosure are due to a combination of gaps and inconsistencies in fiscal transparency standards, delays and discrepancies in countries’ adherence to those standards, and a lack of effective multilateral monitoring of compliance with those standards.
The paper, therefore, calls for a revitalized fiscal transparency effort to address the shortcomings in existing fiscal transparency standards, practices and evaluation tools. Fiscal transparency standards need to be updated so as to ensure that published fiscal reports (i) cover a wider range of public sector institutions; (ii) capture a broader range of direct and contingent assets and liabilities; (iii) recognize a wider range of transactions and flows; (iv) are published in a more timely manner; (v) take a more rigorous approach to fiscal forecasting and risk analysis; and (vi) present forecast and actual fiscal data on a consistent basis. Technical standards also need to be supplemented by more practical guidance on their implementation. Finally, the IMF’s monitoring of country compliance with fiscal transparency standards needs to be enhanced to offer a more analytical, accessible, and graduated evaluation of countries’ fiscal reporting practices.
As part of this proposed set of reforms, the IMF will be revising the Code of Good Practices and Manual on Fiscal Transparency as well as the way in which it evaluates countries’ transparency practices. Your comments/suggestions will be an important input into this process.
Questions for Consultation
We are seeking your input into the redesign and development of the IMF’s fiscal transparency norms, guidance, and evaluation instruments. We are interested in your comments on the following issues:
- Does the structure and format of the existing Code provide an intuitive and accessible description of good fiscal transparency practice? If not, how should the structure and format of the Code be improved?
- Does the Code adequately address all of the most important aspects of fiscal transparency? What practices should be dropped? What practices should be added? Which practices should be updated to reflect recent developments in fiscal reporting standards and practices or the lessons learned from the crisis?
- Should the Code continue to set a single good practice standard in each area or should it distinguish between basic, good, and best practices in each area to provide all countries with a set of milestones towards full compliance with international standards?
- Does the Manual provide sufficiently clear and comprehensive guidance to all countries on how to implement the practices in the Code? If not, how could it be improved?
- Should the Guide on Natural Resource Revenue Transparency be revised as part of this exercise? If so, what revisions should be made to the structure, format, and content of the Guide?
- How can the structure and format of the IMF’s evaluation of countries fiscal transparency practices (the fiscal ROSC) be improved to make these evaluations more analytical, accessible, and actionable?
The IMF Civil Society Team will receive the comments and post a summary of the comments received. Senders can request for their comments to be private. Any interested stakeholder can submit their input through the following channels:
- E-mail: IMFConsultation@imf.org
- Fax: +1 202 623 6220
When submitting your comments, via fax or email, please include the following information so that your comments are registered: name of sender; organization you represent; address; country; phone number; and e-mail address.
Comments should be submitted no later than February 10, 2013.
Next Steps after this Consultation
Upon completion of this first round of consultation, the IMF plans to prepare a revised draft of the Code of Good Practices and Manual on Fiscal Transparency which will form the basis of a second round of public consultation in Spring 2013. The IMF plans to submit final versions of the new Code and Manual to its Executive Board for approval and publication in late 2013.