Press Release: IMF Publishes Fiscal Transparency Evaluation for Russia
May 26, 2014Press Release No. 14/241
May 26, 2014
The IMF has today published a Fiscal Transparency Evaluation (FTE) report for Russia, which was carried out at the request of the Government of the Russian Federation by a joint team from the Fund’s Fiscal Affairs and Statistics Departments that visited Moscow in October 2013. This report is one of eight pilots of the IMF’s new instrument for assessing countries’ fiscal transparency practices based on a revised draft of the Fund’s Fiscal Transparency Code.
The report recognizes the substantial progress that Russia has made in strengthening fiscal disclosure over the past decade and a half which has brought its fiscal reporting and budgeting practices into line with good or advanced practices in most areas. In particular:
- the 1998 Budget Code provides a comprehensive legal framework for fiscal management;
- the government publishes frequent and timely accrual-based fiscal statistics which consolidate federal, regional, and municipal governments;
- the budget is based on credible macroeconomic forecasts, has a strong medium-term orientation, is guided by a new oil price-based fiscal rule, and is submitted and approved in a timely manner; and
- there is detailed disclosure of and firm central controls over key sources of fiscal risk including debt, credit, and guarantee issuance by federal and sub-national governments.
The evaluation also highlights scope for further improvement in Russia’s fiscal transparency practices in a number of areas, including:
- government-controlled enterprises: while fiscal reports provide a relatively comprehensive picture of the Federal and sub-national government finances, they cover only around 60 per cent of the public sector which, after taking into account the large and complex array of government-controlled enterprises, accounts for more than two-thirds of domestic economic activity;
- recognition of assets and liabilities: while reported balance sheets include most conventional assets and liabilities, they do not currently recognize the government’s estimated 200 percent of GDP in sub-soil oil and gas reserves and 287 percent of GDP in accrued liabilities from public pensions and PPPs; and
- budget comprehensiveness: while the federal budget is relatively comprehensive, a large (14 percent) and growing proportion is classified as secret, and there a plans for significant extra-budgetary expenditure and lending via sovereign wealth funds.
The report recommends a series of actions over the next five years to enhance fiscal disclosure in these and other areas including steps to: (i) clarify the boundary between general government, public, and private sectors and expand the institutional coverage of fiscal reports to encompass the whole public sector; (ii) recognize a broader range of assets and liabilities in balance sheets; (iii) enhance the consistency between budgets, statistics, and accounts; (iv) improve the coverage and detail of the annual budget; (v) enhance the scrutiny and analysis of fiscal forecasts, tax expenditures, and near and longer-term fiscal risks; and, (vi) strengthen the financial oversight of government-controlled enterprises.
Background on Fiscal Transparency Evaluations
Fiscal Transparency Evaluations (FTEs) have replaced the fiscal transparency ROSC1 as the Fund’s principal instrument for evaluating the transparency of countries’ fiscal reports, forecasts, and risk management. FTEs examine the extent to which a country’s published fiscal information provides a complete and accurate picture of its fiscal position, prospects, and risks. The Russian FTE was one of eight pilot assessments based on a working draft of the revised Fiscal Transparency Code.
Building on the recommendations of the 2012 IMF Board Paper “Fiscal Transparency, Accountability, and Risk”, the FTE improves on the fiscal transparency ROSC by:
- placing greater emphasis on the quality of reported information, rather than the clarity of reporting procedures;
- providing countries with a clearer summary of how their fiscal reports, forecasts, and risk analysis compare against international standards;
- undertaking a more rigorous analysis of sources and scale of any gaps in countries’ published fiscal information; and
- offering countries that request it with a sequenced, medium-term action plan for addressing those gaps.
The Russia Fiscal Transparency Evaluation report can be found here (http://www.imf.org/external/pubs/ft/scr/2014/cr14134.pdf )
The working draft of the revised Fiscal Transparency Code used in the assessment can be found here (http://www.imf.org/external/np/exr/consult/2013/fisctransp/index.htm)
Further information about the new Fiscal Transparency Code and Evaluation can be found at (http://www.imf.org/external/pubs/ft/survey/so/2013/POL061713A.htm)
IMF COMMUNICATIONS DEPARTMENT