## _080712 ## Source details **Canonical URL:** [_080712](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2012/_080712.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2012/_080712.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2012/_080712.pdf.json) --- ### Fiscal transparency: definition, role, and benefits - Fiscal transparency defined as "the clarity, reliability, frequency, timeliness, and relevance of public fiscal reporting and the openness to the public of the government’s fiscal policy-making process." - Key concepts: - Government accounting: concepts, standards, rules, and systems used to generate financial information. - Fiscal reporting: production of summary information about the past, present, and future state of the public finances. - Public fiscal reporting: publication and dissemination of fiscal forecasts, government finance statistics, or government financial statements/accounts. - Fiscal risks: factors that lead to differences between a government’s forecast and actual fiscal position. - Documented benefits and empirical evidence: - Positive relationship between fiscal transparency and fiscal sustainability (deficits and debts); stronger correlation among low and middle income countries than among high income countries. - Positive relationship between fiscal transparency and market perceptions of fiscal solvency (credit default swap spreads, credit ratings, foreign equity investment); stronger correlation among high-income than middle-income countries. - Cited studies and findings: Hameed (2005); Dabla-Norris and others (2010); Alt and Lassen (2006); Arbatli and Escolano (2012); Glennerster and Shin (2008); Weber (2012); Irwin (2012); Gelos and Wei (2005). ### Crisis lessons and major shortcomings in fiscal transparency - Crisis revealed inadequate understanding of fiscal positions in advanced economies: emergence of previously unrecorded deficits and debts and large implicit government liabilities to the financial sector. - Major shortcomings: - Gaps and inconsistencies in standards for coverage of public institutions, treatment of assets and liabilities, reporting of transactions and other economic flows, comparability between forecast and actual data. - Slow implementation of international standards: - First IPSAS issued in 2000 and revised GFSM promulgated in 2001. - Out of 182 countries, only 55 countries had fully adopted GFSM 2001 for statistical reporting by 2010. - Less than 20 countries have fully adopted IPSAS, IFRS, or similar standards for accounting (IFAC, 2008). - Waning monitoring by the IMF: - Annual number of countries undergoing a fiscal ROSC or update peaked at 21 in 2002 and fell to just one in 2011. - Decomposition of unexpected debt increases (ten countries with largest unanticipated increases, 2007–2010): - 23 percent due to incomplete understanding of underlying fiscal position. - 37 percent due to underestimation of likelihood and scale of shocks. - 18 percent attributable to discretionary policy measures. - 22 percent due to other factors. - Weighted-average summary (percent of 2010 GDP): - 2007 FORECAST FOR 2010 GROSS DEBT: 58.8 - Underlying fiscal position (a+b+c): 6.0 - Exogenous shocks (d+e): 9.8 - Policy changes (f): 4.7 - Others factors (g): 5.9 - HIGHER THAN EXPECTED DEBT (a+b+c+d+e+f+g): 26.4 - LOWER THAN EXPECTED GDP (h)**: 5.4 - INCREASE IN DEBT/GDP RATIO (a+b+c+d+e+f+g+h): 31.8 - ACTUAL 2010 GROSS DEBT: 90.6 ### Coverage, public corporations, and sovereign exposures - Institutional coverage: - International standards emphasize consolidated general government as relevant unit; some countries now consolidate broader public sector. - A handful of advanced countries (including Australia, Iceland, and the UK) publish fiscal statistics covering the entire public sector. - Scale of government-related enterprise debt (14 advanced countries): - 2008: US$8.4 trillion or 25 percent of their aggregate GDP. - Since the crisis: US$10.6 trillion or 29.5 percent of aggregate GDP. - Examples when implicit guarantees crystallize: - United States: crystallization of federal implicit guarantee to Fannie Mae and Freddie Mac in 2008 increased the federal deficit by US$291 billion (2 percent of GDP) and gave rise to cumulative commitments of around $100 billion over the following decade. - Dubai (UAE): as of January 2010, government-related enterprises had US$86 billion (79 percent of GDP) in debt vs government debt of US$24 billion (21 percent of GDP). ### Central banks, quasi-fiscal activities, and financial interventions - Central bank transparency and reporting: - Many central banks follow accrual accounting and IFRS; some depart from standards for contingent liabilities, valuation bases, or omit cash flow statements. - Departures can impair whole-of-government consolidated financial statements and audit opinions. - Recommendation: central banks encouraged to follow internationally recognized standards in full, with supplementary information where needed for consolidation. - Central bank balance sheet expansion (2007–2011) and funding of asset purchases: - Liabilities of the European Central Bank doubled; liabilities of the Federal Reserve and Bank of England more than tripled. - By end-2011 these central banks’ assets and liabilities accounted for between 15 and 30 percent of GDP. - Base money increases accounted for around half of ECB liability increase; three quarters for the Federal Reserve and Bank of England; over 90 percent for the Bank of Japan. - Near-term fiscal impact: - Seigniorage increased from less than ½ percent of GDP per year before the crisis to over 2 percent of GDP per year since 2008 across selected advanced countries. - Long-term fiscal risks: - Risks that seigniorage will fall as real money demand normalizes; central banks may incur losses winding down assets if asset quality impaired, government financing requirements remain high, or future interest rate rises reduce market values. - Worst-case: central bank losses could require government capital injections. ### Assets, liabilities, guarantees, and reporting gaps - Pre-crisis balance sheet data averages: - Governments producing financial balance sheets in 2007 reported financial assets of 21 percent of GDP on average. - The 12 governments with full balance sheets reported nonfinancial assets of 14 percent of GDP on average. - Crisis-related changes (averages): - Government holdings of financial assets increased by around 4 to 5 percent of GDP since 2007. - Government liabilities increased by more than 20 percent of GDP since 2007. - Around 30 percent of asset increase since 2007 from currency and deposits; 25 percent from loans; 25 percent from securities; remainder from accounts receivable and other financial assets. - Reporting coverage to IMF: - Number reporting financial assets and liabilities increased from 21 in 2004 to 41 in 2011. - Number able to provide comprehensive balance sheets increased from 9 to 14 between 2004 and 2011. - Only 13 countries reported data on stock and depletion of naturally occurring assets despite 47 countries relying on such assets for over half of export revenue. - Guarantees and contingent liabilities: - Stock of government-guaranteed bonds issued by private and public financial institutions increased from US$120 billion in 2008 to US$1.4 trillion in 2012. - Statistical standards generally do not allow recognition of most guarantees on government balance sheet unless called; IPSAS requires recognition of financial guarantee contracts at fair value; provisions for other contingent liabilities recognized only when payment deemed probable (>50 percent). - Example: since March 2012 the UK government announced new government guarantees of £20 billion (1.3 percent of GDP) and a further £50bn (3.2 percent of GDP). - Bad and doubtful debts: - Accounting standards require recognition of likelihood-of-repayment changes as an expense. - Statistical standards treat bad debts written off as other economic flows; provisions for doubtful debts are not recognized but disclosed as memorandum items. - Option: include supplementary information and multiple summary aggregates in statistical reports where full harmonization is not achievable. ### Transactions, accruals, derivatives, and timing manipulation - Transaction design and cash accounting risks: - Examples of transactions designed to reduce reported deficits (e.g., takeovers of pension schemes counted as revenue; sale-and-leaseback arrangements). - Predominance of cash accounting permits timing manipulation (deferring disbursement to reduce reported cash deficits). - Accrual reporting trends: - Number reporting data to IMF on a partial or full accrual basis increased from 38 to 64 over seven years. - Most countries still report solely on a cash basis. - Derivatives and disclosure: - GFSM 2001 and IPSAS provide for recognition and disclosure of derivatives and changes in market values after inception, but many governments do not comply. - Derivative liabilities are excluded from the Maastricht debt measure, permitting prior off-market swaps to borrow without reporting additional debt. ### Frequency, timeliness, and forecasting - Periodicity of fiscal reporting (Number of countries): - Monthly 96; Quarterly 32; Semi-annually 3; Annually 37; Unknown 16. - Timeliness (Number of countries): - 1 month or less 83; 1-3 months 46; 3-6 months 8; 6-12 months 18; Over 12 months 25; Unknown 4. - Recommendation on provisional reporting: - Governments should consider publishing provisional central government consolidated fiscal reports on a monthly basis with a one-month lag to provide between eight and ten observations before budget approval. - Fiscal forecasting and budget planning shortcomings (OECD 2007–08, 97 countries): - Only one-third of countries systematically distinguish fiscal impact of current vs new policies. - Less than half prepare disaggregated multi-year budget estimates. - Three quarters extend forecasts three-to-five years; less than one quarter routinely produce long-term (30+ years) projections. - Most forecasts are a single central scenario; less than half of advanced economies systematically explore fiscal risks in budget documentation. - Proposed new standard for fiscal forecasting (required content highlights): - Minimum time horizon and institutional coverage; state economic, demographic assumptions; separately identify impact of new policy measures; include all announced government policies in "post-measures" forecast; breakdown revenue/expenditure by headings; reconcile material changes since last forecast; analyze distributional impact; regularly include long-term projections across plausible assumptions. - Required disclosure: fiscal scenarios under various macro assumptions; statement of discrete fiscal risks giving maximum value, probability, expected value where possible; account of mitigation actions. ### Aligning budgets, statistics, and accounts - Divergence problems: - Differences in institutional coverage, recording bases (cash vs accrual), and treatment of balance sheet gains/losses create accountability gaps and fiscal risk. - Example (US federal government): - Cash-based budget outlays include an average of US$128 billion payments for pensions and other benefits for former federal employees. - Do not include additional US$257 billion annual average increase in pension and other benefit liabilities, which stood at US$5.8 trillion (38.2 percent of GDP) in 2011. - Country practices improving alignment: - Australia: Final Budget Outcome within three months; prepared on same basis as budget and mid-year update; fiscal info largely in line with GFSM 2001 with disclosed departures. - New Zealand: audited annual report three months after year-end; budgets and forecasts prepared on same accounting basis (mainly IFRS). - United Kingdom: Alignment Project aimed to produce consistent budgets, statistics, and accounts by June 2012; prior misalignment contributed to discrepancy around 4 percent of GDP between accountability documents. - Recommendation: Harmonize or align reporting bases across budgets, statistics, and accounts. ### International standard-setting, monitoring, and ROSC limitations - Harmonization and integration: - Standard-setters should harmonize reporting standards for budgets, statistics, and accounts; guidance on coverage of institutions needs alignment. - Standards for fiscal forecasting should include both cash and accrual forecasts and forecast balance sheets. - FAD to prepare position paper on integration across budgets, statistical reports, and financial statements. - Monitoring tiers and findings: - National, regional, and international institutions can apply pressure for disclosure; national institutions include parliaments, SAIs, statistics agencies, fiscal councils; regional bodies include Eurostat, WAEMU, CEMAC; international bodies include IMF, World Bank, OECD, IFAC, IPSASB, INTOSAI, IBP, GIFT. - ROSC (Fiscal Transparency Report on the Observance of Standards and Codes): - Established 1999; evaluation framework based on Code updated in 2007 with four pillars retained. - ROSCs identified some but not all transparency problems during the crisis; often failed to quantify issues or prioritize by fiscal cost. - Design shortcomings: - One-size-fits-all methodology; equal weight for all Code elements; focus on existence of formal institutions over quality of output; reports exhaustive and qualitative but lack clear, comparable summaries; limited integration into Article IV surveillance and uneven follow-up. - Trends: After peaking in 2002, annual ROSCs dropped sharply; annual ROSC production fell to one in 2011. ### Strengthening national, regional, and international fiscal transparency institutions - Recommendations for national institutions (SAIs, statistics agencies, fiscal councils): - Institutional independence: established in constitution or primary legislation; heads selected on merit, fixed term, removable only for serious misconduct; budgets with medium-term certainty; report directly to legislature and public. - Well defined role in public financial management cycle: SAIs to provide formal audit opinion to parliament; statistics agencies responsibilities publicized; fiscal councils have clear remits. - Legal powers to hold government to account: governments obliged to appear before parliamentary finance committees; respond to auditor general recommendations; provide statistics agencies with necessary data; recognize fiscal councils’ verdicts. - Regional institutions: - EU, WAEMU, CEMAC adopted regional budget frameworks/directives and cross-country monitoring committees with implementation horizons of seven to ten years in some cases. ### Capacity building, Fund role, and proposed reforms - Fund capacity building: - FAD to expand contacts, scope, and skills to engage independent fiscal agencies, parliamentary budget bodies, statistics agencies, and SAIs. - FAD FY2013–15 business plan includes allocation for policy development in fiscal transparency; FY2013–15 resource plan includes provisions for two-three fiscal ROSCs per year to pilot revised evaluations in FY 2014 and 2015. - Costs of initiatives can be accommodated within FAD’s budget over the next three years. - Revision of Fiscal Transparency Code and Manual: - Emphasize consolidated public sector; systematically refer to relevant international reporting standards; require clear articulation of governments’ powers to issue guarantees and PPPs in organic budget legislation; encourage full accounts including comprehensive balance sheets; incorporate new standards for forecasting, budgeting, and risk reporting; promote monthly reporting and audited year-end statements within six months; align reporting standards across budgets, statistics, and accounts. - Revised Code and Manual to describe basic, good, and best practice levels. - Revised ROSC: - Move away from box-ticking to targeted, substantive assessments. - Cater for modular evaluations on key fiscal risks; provide substantive analysis of adequacy/reliability of public fiscal information and estimate fiscal implications of deviations where possible; offer graduated, comparable, actionable assessment and a prioritized fiscal transparency action plan. - Modules could feed fiduciary risk assessments for countries seeking Fund resources. - Dissemination and indicators: - FAD proposes regular fiscal transparency updates on cross-country indicators and electronic availability. ### FAD survey results and cross-country data (January 2012; n=48) - Institutional coverage of regularly published data on fiscal flows (All): - Central Government Budget 96; Extrabudgetary Funds 27; Regional and Local governments 58; Nonfinancial Public Corporations 19; Financial Public Corporations 10; Other 8. - Timeliness and periodicity (All): - Month 58; Quarter 27; Annual 4; Other 10. - No More than One Month 34; No More than one Quarter 57; No More than Six Months 6; No More than One Year 2. - Reliability concerns: - 75 percent of sampled countries perceived to have known quasi-fiscal activity conducted outside reported fiscal data. - Subsidized lending and/or bank recapitalization reported in 50 percent of countries. - Governments charging less than commercial prices reported in 44 percent of countries. - 35 percent of countries had a significant statistical discrepancy (>1 percent of GDP) between overall balance and financing data; 80 percent in Latin America and 50 percent in Asia-Pacific. - Sources of fiscal risk (All, selected figures in percent): - By Transaction: Budgeted taxes and spending 60; Extrabudgetary spending 52; Quasi-fiscal activities 54; Government guarantees 46; Commodity prices 46. - By Institution: Central government 62; Nonfinancial public corporations 60; The financial sector 37; Subnational governments 31. - Fiscal risk statements and scenarios: - Only 10 percent produce alternative macroeconomic scenarios; only 8 percent produce alternative fiscal scenarios. - Two-thirds (67) of countries sampled did not publish any fiscal risk statement. - Of those that did: qualitative statements 23; quantified statements 10. ### Appendix II — Review of fiscal ROSCs in crisis-hit countries: cross-cutting observations - ROSC country reviews covered Germany, France, Greece, Netherlands, Portugal, Spain, United Kingdom, United States and others. - Commonly identified weaknesses across ROSCs: - Insufficient integration and disclosure of contingent liabilities, quasi-fiscal activities, PPPs, and off-budget entities. - Gaps in consolidated reporting across general government and across central and subnational tiers. - Weaknesses in timely, reliable, and comprehensive fiscal reporting including budget execution, commitments, and arrears. - Lack of systematic quantification of fiscal risks and failure to estimate relative fiscal costs of transparency shortcomings. - Need for stronger medium-term frameworks, legal commitment mechanisms, and better presentation of macrofiscal strategy. - Follow-up and implementation patterns: - Implementation varied: some countries enacted significant reforms (France's LOLF; Germany's debt-brake constitutional rule; transfers of quasi-fiscal activities to specialist development banks). - Article IV follow-up was uneven; several Article IVs were silent after initial ROSC reporting. - Limitation in ROSC practice: - Problems often identified qualitatively without quantification or prioritization by fiscal cost or risk. *Source: Excerpts from IMF PDF chapter/section _080712_.* ### Executive Summary ...................................................................................................... ### EXECUTIVE SUMMARY ### Fiscal transparency: definition and role - Fiscal transparency is "the clarity, reliability, frequency, timeliness, and relevance of public fiscal reporting and the openness to the public of the government’s fiscal policy-making process." (Box 1) - Government accounting: concepts, standards, rules, and systems used to generate financial information. - Fiscal reporting: production of summary information about the past, present, and future state of the public finances for internal and external uses. - Public fiscal reporting: publication and dissemination of fiscal forecasts, government finance statistics, or government financial statements/accounts. - Fiscal risks: factors that lead to differences between a government’s forecast and actual fiscal position. - Fiscal transparency supports: - shared and accurate assessment of current fiscal position; - informed economic decisionmaking by legislatures, markets, and citizens; - accountability for fiscal performance and use of public resources; - mitigation of fiscal spillovers across countries. ### Crisis lessons and persistence of shortcomings - The recent economic and financial crisis revealed that even advanced economies had an inadequate understanding of their fiscal positions, shown by emergence of previously unrecorded deficits and debts and large, mainly implicit, government liabilities to the financial sector. - Shortcomings in fiscal disclosure arise from: - gaps and inconsistencies in fiscal transparency standards; - delays and discrepancies in countries’ adherence to standards; - lack of effective multilateral monitoring of compliance. - The crisis increased incentives for governments to engage in activities that cloud the true state of their finances, strengthening the case for a revitalized fiscal transparency effort. ### Empirical evidence on benefits of transparency - A positive relationship exists between fiscal transparency and measures of fiscal sustainability (government deficits and debts), with a stronger correlation among low and middle income countries than among high income countries (Figure 1a). - A positive relationship exists between fiscal transparency and market perceptions of fiscal solvency (credit default swap spreads, credit ratings, foreign equity investment), with a stronger correlation among high-income than middle-income countries (Figure 1b). - Studies cited: - Hameed (2005), Dabla-Norris and others (2010): more transparent developing countries have better credit ratings and better fiscal discipline. - Alt and Lassen (2006): greater fiscal transparency associated with lower public debt and deficits in 19 advanced economies. - Arbatli and Escolano (2012): find direct impact (reducing current uncertainty) dominates in developing countries; indirect impact (improving primary balance and gross debt over time) dominates in advanced economies. - Glennerster and Shin (2008): publication of IMF fiscal data and reports causally linked to lower government bond yields. - Weber (2012), Irwin (2012), Gelos and Wei (2005): fiscal obfuscation linked to higher perceived sovereign default risk and vulnerability to capital withdrawals. ### Progress over the last decade and a half - International, regional, and national efforts have advanced fiscal transparency, including: - Development of a global architecture of fiscal transparency norms: IMF’s Code of Good Practices on Fiscal Transparency and accompanying manuals and guides; statistical and accounting standards (GFSM, IPSAS). - Strengthening monitoring: IMF Fiscal Transparency ROSC and PEFA assessments. - The Fund has conducted 111 ROSCs since 1999, covering 94 countries. - IMF, World Bank, and other partners have undertaken 285 PEFA assessments covering 135 countries. - Civil society monitoring: International Budget Partnership’s Open Budget Survey (OBS) covering more than 100 countries. - National improvements: many governments now produce accrual-based accounts or fiscal statistics based on international standards; 87 percent of countries surveyed published their annual budgets in 2010 (2010 OBS). - Open Budget Index (OBI) increased from 46 in 2006 to 50 in 2010 (out of a possible 100). ### Required reforms: three fronts 1. Update and strengthen fiscal transparency standards - Standards must ensure published fiscal reports: - cover a wider range of public sector institutions; - capture a broader range of direct and contingent assets and liabilities; - recognize a wider range of transactions and flows; - be published in a more timely manner; - take a more rigorous approach to fiscal forecasting and risk analysis; - present forecast and actual fiscal data on a consistent basis. - Some standards need supplementary guidance on implementation. 2. Revise IMF assessment approach: modular, analytical, and calibrated - Revise the Fiscal Transparency Code and Manual to reflect refined standards and provide achievable milestones toward full compliance. - A more graduated Code and Manual would underpin a more focused and substantive fiscal ROSC that would: - cater for modular assessments focused on key areas of fiscal risk; - include an assessment of the adequacy and reliability of public information on the state of the fiscal accounts; - provide a comparable and actionable final report. 3. Strengthen monitoring incentives at national, regional, and international levels - Foster national and regional constituencies for transparency (supreme audit institutions, national statistics agencies, fiscal councils, regional surveillance bodies). - Strengthen institutional relationships among international standard-setters. - Provide regular updates on the state of fiscal transparency practices across countries. ### Structure of the paper (overview of sections) - Section II: background on benefits of fiscal transparency and international efforts. - Section III: relationship between fiscal transparency and fiscal risks. - Section IV: adequacy of prevailing fiscal transparency standards and practices. - Section V: assessment of monitoring mechanisms (international, regional, national). - Section VI: issues for discussion. *Executive Summary.* ### 6. However, substantial shortcomings in fiscal transparency remain: ### _080712 - 6. However, substantial shortcomings in fiscal transparency remain: ### Major shortcomings in fiscal transparency - Gaps and inconsistencies in standards for: - coverage of public institutions; - treatment of assets and liabilities; - reporting of transactions and other economic flows; - comparability between forecast and actual data. - Slow implementation of international accounting and statistical reporting standards: - First IPSAS issued in 2000 and revised GFSM promulgated in 2001. - Out of 182 countries, only 55 countries had fully adopted GFSM 2001 for statistical reporting by 2010. - Less than 20 countries have fully adopted IPSAS, International Financial Reporting Standards (IFRS), or similar standards for accounting (IFAC, 2008). - Waning monitoring of fiscal transparency by the IMF: - Annual number of countries undergoing a fiscal ROSC or update peaked at 21 in 2002 and fell to just one in 2011. - Decline reflected a combination of falling demand and a reduction in Fund resources devoted to this area. - Monitoring by other institutions has not been sufficient to prevent substantial underreported deficits and debt in some advanced economies. ### Fiscal transparency and fiscal risks — role and mechanisms - Fiscal risks are factors that give rise to differences between a government‘s forecast and actual fiscal position. - Sources of differences include: - (i) incomplete understanding of the government‘s underlying fiscal position; - (ii) exogenous shocks to the public finances; - (iii) endogenous changes in fiscal policy settings. - How improved fiscal transparency helps: - more frequent and timely public reporting of fiscal developments supports up-to-date forecasts and rapid policy responses to shocks; - budget sincerity requirements, comparisons with independent forecasts, and alternative macro-fiscal forecast scenarios enhance credibility and robustness of fiscal forecasts; - fiscal risk statements raise awareness of potential shocks and encourage mitigation or provisioning; - expanding institutional coverage of public fiscal reporting reduces scope for off-budget fiscal activity; - implementation of international accounting and statistical standards highlights hidden costs or obligations and encourages budgeting for them; - aligning methodologies and standards for fiscal forecasting, budgeting, and reporting helps eliminate unexplained inconsistencies between forecasts and outturns; - publication of audit reports in accordance with internationally accepted standards highlights weaknesses in financial control or accounting practices and prompts remedial action. ### Findings from the crisis: decomposition of unexpected debt increases (Box 2) - For the ten countries with the largest unanticipated increases in general government gross debt between 2007 and 2010, decomposition of the unforecast increase (percent of 2010 GDP) found: - 23 percent of the increase was due to an incomplete understanding of the government’s underlying fiscal position (revisions, perimeter changes, cash-to-accrual adjustments). - 37 percent of the increase was due to an underestimation of the likelihood and scale of shocks to the government’s fiscal position (macroeconomic factors and financial sector interventions). - 18 percent of the increase was attributable to discretionary policy measures introduced in the wake of the crisis. - 22 percent of the increase was due to other factors. - Weighted-average summary (column labeled Weighted Ave* in Box 2 table): - 2007 FORECAST FOR 2010 GROSS DEBT: 58.8 (percent of 2010 GDP) - Underlying fiscal position (a+b+c): 6.0 - Exogenous shocks (d+e): 9.8 - Policy changes (f): 4.7 - Others factors (g): 5.9 - HIGHER THAN EXPECTED DEBT (a+b+c+d+e+f+g): 26.4 - LOWER THAN EXPECTED GDP (h)**: 5.4 - INCREASE IN DEBT/GDP RATIO (a+b+c+d+e+f+g+h): 31.8 - ACTUAL 2010 GROSS DEBT: 90.6 ### Broader survey evidence on sources of fiscal risk - IMF FAD country economist survey (early 2012; n=48 countries) found: - By transaction type: macroeconomic shocks to budgeted revenue and spending are the most common source of fiscal risk in all regions, followed by quasi-fiscal activities, extrabudgetary spending, government guarantees, and social security obligations. - By institutional type: public corporations were seen to pose almost as great a risk as shocks to the central government budget, followed by social security institutions, the financial sector, and subnational governments. ### Coverage of public institutions and public sector reporting - International standards (GFSM 2001, ESA95, 2008 SNA) emphasize consolidated general government as the relevant unit for fiscal policy-making and statistical reporting. - Progress since the 1990s in expanding institutional coverage to general government, especially in Europe and Latin America; some Latin American countries prepare nonfinancial public sector data consolidating general government with nonfinancial public corporations. - A handful of advanced countries (including Australia, Iceland, and the UK) publish fiscal statistics covering the entire public sector, consolidating general government with all nonfinancial and financial public corporations (including the central bank). ### Scale and fiscal implications of public corporations and government-related enterprises - Outstanding debt of government-related enterprises (excluding the central bank) in 14 advanced countries: - 2008: US$8.4 trillion or 25 percent of their aggregate GDP. - Since the crisis: US$10.6 trillion or 29.5 percent of aggregate GDP. - Examples of fiscal consequences when implicit guarantees crystallize: - United States: crystallization of federal implicit guarantee to Fannie Mae and Freddie Mac in 2008 increased the federal deficit by US$291 billion (2 percent of GDP) and gave rise to cumulative commitments of around $100 billion over the following decade. - Dubai (United Arab Emirates): as of January 2010, government-related enterprises (e.g., Dubai World) had accumulated US$86 billion (79 percent of GDP) in debt compared with US$24 billion (21 percent of GDP) owed by the government of Dubai. ### Central banks and quasi-fiscal activities (QFA) - Central bank QFAs in some emerging and developing economies have contributed to significant and unexpected deteriorations in the overall financial position of the public sector. - Reported public sector losses from central bank QFAs have ranged from 5 percent of GDP in Jamaica in the early 1990s to 29 percent of GDP in Zimbabwe in 2006. - Net public sector impact of central banks’ interventions in the wake of the recent crisis has been more complex (discussion continued in Box 4 elsewhere in source). *Source: Excerpt from IMF PDF chapter/section titled "_080712 - 6. However, substantial shortcomings in fiscal transparency remain:"* ### 15. The transparency of central bank activities would be enhanced if they prepared ### 15. The transparency of central bank activities would be enhanced if they prepared ### Transparency of central bank financial reporting - Central banks tend to have more advanced accounting and reporting than governments, with many following accrual accounting and preparing their financial statements in accordance with international standards such as IFRS. - Some central banks depart from those standards when they consider such departures justified: - Certain disclosure requirements in respect of contingent liabilities are considered inappropriate when acting as lender of last resort. - Valuation bases for particular financial assets may differ from those specified by the relevant standards. - Some central banks do not publish a cash flow statement because they consider such a statement to be of limited relevance to their stakeholders. - Risks and consequences: - Such practices can impair the transparency of whole-of-government financial statements that consolidate central bank financial statements. - When material, departures from standards may lead to whole-of-government financial statements failing to receive an unqualified audit opinion. - Recommendation: - Central banks should be encouraged to follow internationally recognized standards in full, though some supplementary information may be required to allow for consolidation with public sector accounts. ### Broadening institutional coverage of fiscal analysis - Improvements proposed: - Fiscal data for the general government and its sub-sectors should be complemented by publication of comparable data on other parts of the public sector, including nonfinancial public corporations and financial public corporations (including the central bank). - Governments should aim to publish consolidated fiscal data for the nonfinancial public sector and for the public sector as a whole as understanding improves. - Guidance cited: - STA’s 2008 Guide on Consolidation of Nonfinancial Public Sector Statistics and a forthcoming FAD technical note on financial oversight of public corporations will provide operational guidance. ### Key conceptual and practical challenges in evaluating whole public sector financial position - Main conceptual differences between government and public corporation accounting: - Public corporations using commercial accounting do not typically regard investment in fixed assets as a cost, while most governments treat capital expenditure as a cost (increasing their primary measure of the deficit, net borrowing). - Revenues from voluntary commercial activities of public corporations are conceptually different from revenues from compulsory taxation; simply adding the two would overstate the tax burden. - Consolidation of public corporations’ gross liabilities with those of the general government could overstate public sector financial vulnerability because those liabilities are typically matched by commercial assets. - Consolidating the central bank with the rest of the public sector requires different treatment of the central bank’s monetary liabilities, as issuance of base money generally does not give rise to a fiscal imbalance. - Note on harmonization: - A number of conceptual differences would be eliminated if governments implemented accrual-based reporting standards such as GFSM 2001 and IPSAS, which focus on the operating balance as the principal measure of financial performance and overall net worth as the principal measure of financial position. ### Central banks and financial sector interventions (Box 4) — scale, funding, and fiscal implications - Scale of balance sheet expansion since 2007: - Between 2007 and 2011, the liabilities of the European Central Bank doubled, and those of the Federal Reserve and Bank of England more than tripled in size. - By the end of 2011, these central banks’ assets and liabilities accounted for between 15 and 30 percent of GDP. - Funding of asset purchases (quantitative easing): - Increases in base money accounted for around half of the increase in the European Central Bank’s liabilities, three quarters for the Federal Reserve and Bank of England, and over 90 percent for the Bank of Japan. - Near-term public finance impact: - Net impact on public finances has been positive in the short term, primarily via seigniorage revenues. - Seigniorage increased from less than ½ percent of GDP per year before the crisis to over 2 percent of GDP per year since 2008 across selected advanced countries. - Increased central bank purchases of sovereign debt reduced net liabilities to the private sector and helped keep sovereign borrowing costs low. - Long-term fiscal risks: - As real money demand returns to normal, non-inflationary seigniorage revenues are likely to fall. - Central banks may find it difficult to wind down sizable asset holdings at a profit if: - (i) the quality of those assets has been impaired in the interim; - (ii) government financing requirements remain high; or - (iii) future interest rate rises reduce the market value of fixed-rate instruments. - In a worst-case scenario, central bank losses on asset holdings could create a need for a capital injection from the government to recapitalize the central bank. ### Reporting of assets and liabilities — coverage, trends, and gaps - Pre-crisis and structural data: - In 2007, the 36 governments that produced financial balance sheets reported holdings of financial assets of 21 percent of GDP on average, with shares and other equity and currency and deposits accounting for the largest instruments. - The 12 governments that produce full balance sheets reported holdings of nonfinancial assets of 14 percent of GDP on average, with buildings and land being the largest share. - In some countries, especially those with large sovereign wealth funds or natural resource endowments, government holdings of financial and nonfinancial assets can be many multiples of GDP. - Crisis-related changes (2007–2010 and 2007–2011): - Government holdings of financial assets increased by around 4 to 5 percent of GDP on average since 2007. - Government liabilities increased by more than 20 percent of GDP since 2007. - Around 30 percent of the increase in government holdings of financial assets since 2007 was from acquisition of currency and deposits, 25 percent each from acquisitions of loans and securities, and the remainder from accounts receivable and other financial assets. - Reporting coverage to the IMF: - Number of countries reporting data on financial assets and liabilities to the IMF increased from 21 in 2004 to 41 in 2011. - The number of countries able to provide comprehensive balance sheets including both financial and nonfinancial assets and liabilities increased from 9 to 14 between 2004 and 2011. - Only 13 countries reported data on the stock and depletion of naturally occurring assets despite 47 countries relying on such assets for over half of their export revenue. - Challenges in accounting for crisis-related interventions: - Coverage: Many interventions were undertaken by central banks or special purpose vehicles not consolidated with government financial statements; entities acquired may not be consolidated despite majority stakes and managerial control. - Valuation and recognition: Governments that report on an accrual basis generally value acquired assets and liabilities at fair value or recoverable amount, but subsequent gains and losses treatment varies from non-recognition to full recognition; cash-basis reporters may not report these assets/liabilities or valuation effects. - Contingent liabilities: Many countries disclose guarantees and contingent liabilities but very few recognize provisions for amounts that may be payable; current statistical standards generally do not allow recognition of most guarantees or contingent liabilities unless called or crystallized. - Specific data on guarantees and contingent liabilities: - The stock of government-guaranteed bonds issued by private and public financial institutions increased from US$120 billion in 2008 to US$1.4 trillion in 2012 (short-term debt not included). - Statistical standards do not allow recognition of most guarantees on the government balance sheet unless called; IPSAS requires recognition of financial guarantee contracts at fair value, while provisions for other contingent liabilities are recognized only when payment is deemed to be probable (more than 50 percent likely). - Example of policy use of guarantees: since March 2012 the UK government announced new government guarantees of £20 billion (1.3 percent of GDP) to encourage bank lending to small businesses and a further £50bn (3.2 percent of GDP) to promote private investment in infrastructure and exports. - Treatment of bad and doubtful debts: - Accounting standards require recognition of changes in likelihood of repayment as an expense. - Under statistical standards, bad debts written off are recognized as other economic flows and provisions for doubtful debts are not recognized but only disclosed as memorandum items. - Full harmonization of statistical and accounting standards may not be achievable given different framework objectives; an option is to include supplementary information on these items and multiple summary aggregates in statistical reports. _Italic line: Source: Excerpt from IMF PDF chapter/section titled "_080712 - 15. The transparency of central bank activities would be enhanced if they prepared"_._ ### 24. In summary, providing a more comprehensive picture of overall sovereign net ### _080712 - 24. In summary, providing a more comprehensive picture of overall sovereign net ### Incomplete coverage of sovereign assets and contingent liabilities (paras 24) - Need for international reporting standards to capture a broader range of direct and contingent assets and liabilities to provide a more comprehensive picture of overall sovereign net worth. - Specific cases for standards development: - supplement existing statistical and accounting standards with guidance regarding the recognition of subsoil assets in the face of uncertainty or incomplete information about their value; - require recognition of provisions in respect of a broader range of contingent liabilities in accounts and supplementary summary statistics provided that the amounts can be reliably valued. These contingent liabilities should be valued at their market, fair, or expected present value, taking into account the probability of the liability being called and the amount and timing of any resulting payments, unless there is a clear moral hazard case for non-recognition; - present multiple aggregates in fiscal statistics to supplement the information provided in accordance with existing statistical standards. In particular, if GFSM 2001 cannot be revised in the short to medium term to recognize provisions for contingent liabilities and doubtful debts, these could be incorporated, for analytical purposes, in a fiscal balance that supplements the conventional aggregates such as net lending/borrowing. ### Accounting for transactions and other economic flows (Section C, paras 25–28) - Findings on transactions and reporting: - Some governments designed transactions to reduce reported deficits or debt (examples: takeovers of pension schemes counted as revenue; sale-and-leaseback of government office buildings). - Predominance of cash accounting permits timing manipulation—deferring disbursement of cash can reduce reported cash deficits (examples: Greece, Portugal, subnational Spain). - GFSM 2001, ESA95 and IPSAS require recording revenue and expenditure when value is transferred, addressing payment deferral manipulation. - Over the past seven years the number of countries reporting data to the IMF on a partial or full accrual basis has increased from 38 to 64. - Most countries continue to record and report all government transactions solely on a cash basis. - Derivatives and disclosure: - GFSM 2001 and IPSAS provide for recognition of swaps, futures, and other derivatives and disclosure of additional information, but many governments do not yet comply, especially with recognizing changes in market values after contract inception. - Derivative liabilities excluded from the Maastricht measure of debt created scope for off-market swaps to borrow without reporting additional debt before the crisis; ordinary derivative liabilities remain excluded from the Maastricht measure of debt and thus receive less scrutiny, creating uncertainty about total liabilities. - Policy/action recommendations: - International standard-setters should provide practical guidance on sequencing adoption and implementation of accrual-based reporting standards based on successful experiences. - FAD staff will prepare a guidance note on operational steps to move from cash to full accrual accounting. - Regional standard-setters such as Eurostat should explore aligning treatment of accounts payable and derivative and other financial instruments with more comprehensive GFSM 2001 and IPSAS standards. - At the national level, governments should upgrade accounting systems and practices to record revenues and expenditures when value is transferred and capture other non-transactional economic flows, while retaining controls over cash positions. ### Frequency and timeliness of fiscal reporting (Section D, paras 29–30) - Risks from lack of timely in-year fiscal information: fiscal strategies and budgets rely on limited observations; ex post large revisions undermined fiscal adjustment plans (examples: Greece and Portugal). - Current periodicity and timeliness (Figure 10 table values): - Periodicity (Number of countries): Monthly 96; Quarterly 32; Semi-annually 3; Annually 37; Unknown 16. - Timeliness (Number of countries): 1 month or less 83; 1-3 months 46; 3-6 months 8; 6-12 months 18; Over 12 months 25; Unknown 4. - Recommendation: - Governments should consider publishing provisional central government consolidated fiscal reports on a monthly basis with a one-month lag to provide between eight and ten observations before budget approval. Provisional monthly data will be less detailed, more volatile, and subject to greater revision than quarterly statistical data but improve understanding of in-year fiscal developments. ### Fiscal forecasting and budget planning (Section E, paras 31–34) - Shortcomings identified (OECD 2007–08 Survey of Budget Practices and Procedures in 97 countries): - methodology: only one-third of countries systematically distinguish the fiscal impact of current and new policies; - construction: less than half of countries prepare disaggregated multi-year budget estimates; - horizon: three quarters of countries’ fiscal forecasts extend three-to-five years ahead, but less than one quarter routinely produce long-term fiscal projections (i.e., for 30 years or more). - Additional finding: most countries’ fiscal forecasts are based on a single, central scenario with limited exploration of alternative assumptions; less than half of advanced economies systematically explore fiscal risks in budget documentation. - Proposed new standard for fiscal forecasting (required content): - cover a minimum time horizon and set of institutions; - state the economic, demographic, and other assumptions underlying the fiscal projections; - separately identify the impact of new policy measures and include all announced government policies in the "post-measures" forecast, even where those measures have yet to be legislated or implemented; - provide a breakdown of revenue by main revenue heading and expenditure by economic category, ministry, and program where relevant; - provide a reconciliation of material changes since the last fiscal forecast; - analyze the distributional impact of government policies on households; - regularly include long-term fiscal projections based on a plausible range of forecast assumptions. - Required disclosure and analysis of fiscal risks: - provision of fiscal scenarios on the basis of various macroeconomic assumptions; - a statement of discrete fiscal risks (such as natural disasters, guarantees, and other contingent liabilities) providing their maximum value, probability, and expected value wherever possible and an account of the mitigating actions being taken; - an account of how these risks have been taken into consideration in setting the overall fiscal stance. ### Aligning budgets, statistics, and accounts (Section F, paras 35–36 and Box 7) - Problem: divergence in reporting concepts across ex ante budgets and ex post statistics and accounts can create fiscal risk and accountability gaps (examples: EU practice of cash-budgeting vs. modified accrual SGP measurement; large ex post revisions in Greece, Portugal, Spain due to payables and arrears). - Sources of divergence and their implications: - Institutional coverage: budgets often cover constitutionally specified budgetary institutions; statistical standards focus on all institutions engaged in non-market activity; accounting standards require consolidation of entities controlled by government (often broader). Financial institutions acquired during the crisis may not be consolidated in budgets or statistics, so fiscal implications may only surface in ex post accounts, if at all. - Recording of transactions: budgets largely cash-based; accounts and statistics increasingly accrual-based. Example for the US federal government: - cash-based budget outlays include an average of US$128 billion of payments for pensions and other benefits for former federal employees; - do not include the additional US$257 billion annual average increase in pension and other benefit liabilities, that stood at US$5.8 trillion (38.2 percent of GDP) in 2011. - Treatment of balance sheet gains and losses: only a handful of countries require explicit provision in budgets for depreciation, impairments, or other changes in asset and liability values. Countries that have adopted GFSM 2001 or IPSAS increasingly recognize gains and losses in final accounts and, under IPSAS, in the reported fiscal balance. - Country practices to improve alignment (Box 7 summary): - Australia: Final Budget Outcome published within three months of end of financial year; prepared on same basis as budget and mid-year update; fiscal information largely in line with GFSM 2001 with disclosed departures where Australian Accounting Standards (mainly IFRS) are used. - New Zealand: audited annual report three months after year-end; budgets and forecasts prepared on same accounting basis (mainly IFRS) as accounts; forecasts comply with New Zealand accounting standard on forecast preparation and disclosure. - United Kingdom: Alignment Project aimed to produce consistent budgets, statistics, and accounts by June 2012; prior misalignment contributed to a discrepancy of around 4 percent of GDP between accountability documents; project reduced the discrepancy and moved elements closer to IFRS. - Recommendation: - Harmonize or align reporting bases across budgets, statistics, and accounts to provide a coherent fiscal picture at all stages of the budget process and to reduce accountability gaps. *Source: IMF PDF chapter section _080712 - 24. In summary, providing a more comprehensive picture of overall sovereign net (excerpts).* ### 37. International standard-setting bodies (such as the UN, IMF, Eurostat, and ### International standard-setting bodies (such as the UN, IMF, Eurostat, and IPSASB) ### Harmonizing reporting standards and integrating fiscal reporting - International standard-setting bodies should work to harmonize reporting standards for budgets, statistics, and accounts. - Guidance on the coverage of institutions needs to be aligned to encourage broad and consistent coverage across financial accountability documents. - Standards for fiscal forecasting should include preparation of both cash and accrual budget forecasts, including forecast balance sheets, to: - give a clear picture of the government‘s financing needs; and - be fully comparable with accrual-based fiscal statistics and final accounts. - Treatment of contingent liabilities and valuation gains and losses should be more closely aligned across budgets, statistics, and accounts so their realization does not consistently come as an ex post surprise to fiscal policymakers and observers. - Full comparability of prospective and retrospective fiscal data within countries requires alignment or integration of underlying national standards and systems used to generate the data. - FAD, in consultation with STA, will prepare a position paper on the integration of fiscal reporting across budgets, statistical reports, and financial statements. ### Strengthening fiscal transparency monitoring and incentives — overview - Promoting greater fiscal transparency requires clear reporting standards and effective monitoring and enforcement of compliance. - Pressure for greater disclosure can come from: - (a) national institutions: parliaments, supreme audit offices, national statistics bodies, independent fiscal agencies, professional and civic organizations; - (b) regional institutions: regional unions, monetary arrangements, and statistics agencies; - (c) international institutions: IMF, World Bank, OECD, international standard-setting bodies such as IFAC, IPSASB, INTOSAI, and civil society groups such as IBP and the Global Initiative on Fiscal Transparency (GIFT). - This section reviews the effectiveness of these three tiers and makes recommendations to enhance their impact. ### A. National and Regional Monitoring of Transparency — findings - Parliaments: - Have a constitutional right and responsibility to hold government to account for public funds. - Recent reforms include: (i) greater input into ex ante fiscal policy formulation; (ii) greater involvement in budget policy decisions; (iii) better analytical support through parliamentary budget offices; (iv) enhanced information and oversight of budget execution. - Progress has been slow, especially outside advanced countries. - Only 45 percent of parliaments are given the opportunity to scrutinize in advance the medium-term fiscal policy framework that informs the annual budget. - Among advanced countries, 26 of 30 parliaments are provided with some kind of pre-budget report (OECD, 2007). - Over 30 percent of legislatures are given less than six weeks to debate and approve the government‘s budget before the start of the year, compared with the minimum of three months called for in IMF and OECD guidance (IBP, 2010). - Supreme audit institutions (SAIs): - Around 80 percent of SAIs are legally, financially, and operationally independent of government. - Over half of countries‘ audit reports on the government‘s annual accounts are either not published or published more than a year later. - An unpublished IMF survey of budget institutions in some 50 countries found that in one-third of countries, the auditor general is not obliged to provide an audit opinion as to whether the government‘s accounts provide a “true and fair view.” - In less than one-third of countries is the government obliged to report to parliament and the public on how auditor general–identified irregularities are being addressed (IBP, 2010). - Citizens, civic groups, and markets: - Only 21 percent of countries currently publish a citizens‘ guide to the budget. - Only 28 percent of legislatures organize public hearings where citizens may testify on budgetary matters. - In more than one-third of countries, all budgetary discussions between the legislative and the executive are conducted behind closed doors (IBP, 2010). - Lack of readily accessible cross-country data on fiscal transparency practices is cited as an impediment to promoting greater fiscal transparency. - Regional bodies: - Play an important role in harmonizing fiscal reporting, especially in monetary unions requiring comparable fiscal data. - Eurostat has driven standardization across EU member states via the European System of Accounts (ESA) and harmonization of national statistical methodologies; Eurostat also assesses quality of fiscal data notified to the European Commission under the Stability and Growth Pact. - WAEMU and CEMAC have catalyzed upgrading and harmonizing fiscal reporting practices in member countries. ### B. International Monitoring of Transparency — ROSC role and limitations - The IMF‘s Fiscal Transparency ROSC: - Established in 1999. - Principal tool for assessing openness of national institutions for fiscal policy-making and transparency of fiscal reporting practices. - Evaluation framework based on the Fund's Code of Good Practices on Fiscal Transparency, updated in 2007. - The revised Code retained four pillars: (i) clarity of roles and responsibilities; (ii) open budget processes; (iii) public availability of information; (iv) assurances of integrity. - The revised Code introduced new good practices and broadened coverage, including contractual arrangements with private companies; publication of a citizens‘ guide to the budget; consultation periods for the budget and changes to laws and regulations; periodic reports on long-term public finances; openness in sale and purchase of government assets. - The government finance statistics module of the IMF‘s data dissemination ROSC complements the fiscal ROSC by assessing compliance with IMF standards for statistical reporting. - Effectiveness during the recent crisis: - Of the ten countries that experienced the largest increase in government liabilities during the crisis, nine had undergone a ROSC within the previous eight years. - ROSCs identified some but not all key transparency problems revealed by the crisis. Reports were most effective at identifying inadequate coverage of fiscal reports, lack of medium-term fiscal forecasts, and weak controls over budget execution. - Issues often not explored included the need for fiscal risk analysis to cover a broader range of output scenarios and better surveillance of exposure to financial sector risks. - Shortcomings identified were not always quantified nor given prominence in summary recommendations. - Shortcomings in ROSC design (evaluations highlighted): - Methodology is one-size-fits-all and makes no allowance for different levels of institutional capacity or economic development, limiting its use by lower-observance countries to chart sequenced reform paths. - Assessment places equal weight on compliance with all elements of the Code and focuses on verifying the existence of formal institutions rather than validating quality of output, giving a “box ticking exercise” feel that can overlook important informal practices and fails to distinguish between more or less serious deficiencies. - Reports tend to be exhaustive and qualitative but lack a clear and accessible summary of country performance relative to the Code and to comparable country groupings. - Recommendations are not always integrated into Article IV consultations and surveillance, nor always followed up by countries; however, they often inform structural conditionality in IMF programs. - Trends in ROSC production: - After peaking in 2002, the annual number of fiscal ROSCs dropped significantly. - Factors explaining the reduction include: - many countries underwent initial assessments and perceived limited gains from updates absent significant reforms or ROSC standard changes; - lack of graduated assessment makes repeated assessments less useful for low- and middle-income countries; - fiscal ROSC lacked an explicit link with access to IMF or other official external financing; - reduction in resources to deliver ROSCs, including IMF downsizing in 2008. ### C. Strengthening National and Regional Fiscal Transparency Institutions — recommendations - Effectiveness depends on legal status, resources, and capacity. To perform functions, audit institutions, statistics agencies, and independent fiscal agencies should: - Be institutionally independent of government: - Established in the constitution or primary legislation. - Heads selected based on professional merit, appointed for a fixed term either by or with the concurrence of the legislature, removable only for serious misconduct. - Budgets should provide medium-term certainty of funding and be insulated from undue executive interference. - These institutions should report directly to the legislature and the public and not through the executive. - Have a well defined role in the public financial management cycle: - SAIs should be required to provide a formal audit opinion on government accounts to parliament. - Statistics agencies‘ responsibilities and procedures regarding production and dissemination of government finance statistics should be publicized. - Fiscal councils should have clear remits regarding ex ante and ex post analysis of fiscal performance. - Professional bodies should play a role in certifying qualifications of government accountants. - Have legal powers to hold government to account: - Governments should be obliged to appear before parliamentary finance committees when called to testify. - Governments should be required to respond to auditor general recommendations in a timely manner. - Governments should be obliged to provide statistics agencies with necessary data about government activities. - Governments should recognize fiscal councils‘ verdicts on fiscal performance. - Relevant finance staff should hold professional qualifications and conduct themselves with integrity. *Source: IMF content unit _080712 - 37. International standard-setting bodies (such as the UN, IMF, Eurostat, and IPSASB).* ### 50. In its capacity building activities, the Fund can help governments foster strong ### 080712 - 50. In its capacity building activities, the Fund can help governments foster strong ### Capacity building and institutional engagement - The Fund can help governments foster strong and independent national institutions for fiscal transparency, including independent fiscal agencies, parliamentary budget and accounts committees, national statistics agencies, and supreme audit institutions. - Technical assistance (TA) in the fiscal area has traditionally focused primarily on the ministry of finance as the principal agency of fiscal management. - FAD will consider further expanding its range of contacts, scope of engagement, and portfolio of skills to encompass the activities of these institutions and will look to identify external resources and reallocate internal resources for these activities. ### Role of regional institutions - Regional institutions can help improve transparency when linked to improvements in members’ financial management practices. - EU, WAEMU, and CEMAC adopted regional budget frameworks/directives to harmonize: budget system laws, budget classification, charts of accounts, and the format of fiscal reports. - These regional unions established cross-country monitoring committees to oversee national implementation. - WAEMU and CEMAC countries were given between seven and ten years to introduce required changes. - Fund staff has been providing TA to regional institutions including WAEMU, CEMAC, and the East African Community to improve fiscal reporting practices across members. ### Updating the IMF Fiscal Transparency Code and Manual - The Code of Good Practices and Manual on Fiscal Transparency need revision to reflect developments in specific standards proposed in Section III. The revised Code and Manual should, inter alia: - place greater emphasis on the consolidated public sector as the broadest unit of fiscal analysis; - more systematically refer to relevant international reporting standards where they exist; - require governments‘ powers to issue guarantees and conclude PPP contracts to be clearly articulated in organic budget legislation; - encourage the publication of a full set of accounts, including comprehensive balance sheets covering the full range of financial and, eventually, nonfinancial assets and liabilities; - incorporate new standards for fiscal forecasting, budgeting, and fiscal risk reporting; - promote monthly reporting on general government finances, especially for countries with a general government fiscal rule, and the publication of audited year-end financial statements within six months; - promote the alignment of reporting standards used in budgets, statistics, and accounts with any remaining discrepancies set out in reconciliation tables; - ensure that external oversight institutions and citizens have the information they need to hold governments to account. - The revised Code and Manual should provide for each practice a description of basic, good, and best practice: - basic practices would be considered as a minimum achievable by all countries; - good practices would require more developed institutional, human, and technological capacities; - best practices would entail full compliance with relevant international standards and being in line with the current “state-of-the-art.” - The revision will seek synergies with the ongoing review of the PEFA to streamline compliance burdens and FAD plans to consult external stakeholders. ### Strengthening relationships with standard-setters and stakeholders - The Fund should strengthen institutional relationships with international standard-setters, professional bodies, and voluntary organizations by: - making an explicit link in the revised Code and ROSC to compliance with relevant international standards in budgeting, statistics, accounting, and audit; - strengthening coordination between standard-setters, professional organizations, and civil society groups through more regular and intensive engagement; - promoting alignment of international reporting standards, identifying and addressing gaps in the normative architecture for fiscal transparency, reviewing implementation progress, and identifying priorities for TA and mutual assistance; - playing a more active role in key standard-setting bodies such as IPSASB; - continuing active engagement in multi-stakeholder initiatives and civil society groups active in fiscal transparency. ### More effective multilateral monitoring (Revised ROSC) - Need for an enhanced ROSC moving away from a “box-ticking exercise” toward targeted, substantive assessments of published fiscal information quality. - The revamped fiscal ROSC will: - cater for more modular evaluations focused on key areas of fiscal risk (e.g., oversight of public corporations; disclosure and management of fiscal risks); - provide more substantive analysis of the adequacy of fiscal reporting practices and estimate, where possible, fiscal implications of deviations from the Code to identify sources and scale of structural fiscal vulnerabilities; - offer a more graduated, comparable, and actionable assessment based on the updated Code differentiating basic, good, and best practices, and include a prioritized and sequenced fiscal transparency action plan to monitor progress. - Modules of the revised ROSC could serve as the basis of a fiduciary risk assessment for countries seeking Fund resources, incorporating lessons from fiscal safeguards pilots. ### Dissemination and cross-country indicators - There is no single, accessible, and up-to-date source of information about the state of fiscal transparency practices across countries. - FAD proposes to provide a regular fiscal transparency update on a set of cross-country fiscal transparency indicators, which could also be available electronically. ### Resource implications - The costs of proposed initiatives can be accommodated over the next three years within FAD’s budget. - FAD‘s FY2013–15 business plan includes an allocation for policy development in the fiscal transparency area to fund revision of the Fiscal Transparency Code, Manual, and ROSC. - FAD‘s FY2013–15 resource allocation plan includes provisions for two-three fiscal ROSCs per year to fund pilots of the revised transparency evaluation missions in FY 2014 and 2015 to low-income, emerging, and advanced economies. - Work on policy and guidance notes, and databases can be met from existing resources for research and policy development in the fiscal area. ### Appendix I — Results of FAD survey on fiscal transparency and risk: Overview - Survey conducted in January 2012 among FAD economists working on 48 countries. - Survey covered institutional coverage, consolidation details, timeliness of fiscal reports, quasi-fiscal activities, inconsistencies in accounting standards, sources of volatility leading to deviation between budgeted and actual outcomes, and assessment of disclosure and management practices. ### Institutional coverage of regularly published data on fiscal flows (Table A1) - By Region (percentage of sample for which given transaction or entity was assessed to pose fiscal risk): - Africa: Central Government Budget 100; Extrabudgetary Funds 25; Regional and Local governments 25; Nonfinancial Public Corporations 0; Financial Public Corporations 0; Other 0 - Asia and Pacific: Central Government Budget 100; Extrabudgetary Funds 17; Regional and Local governments 67; Nonfinancial Public Corporations 0; Financial Public Corporations 0; Other 17 - Europe: Central Government Budget 100; Extrabudgetary Funds 38; Regional and Local governments 94; Nonfinancial Public Corporations 25; Financial Public Corporations 25; Other 13 - Middle East and Central Asia: Central Government Budget 86; Extrabudgetary Funds 29; Regional and Local governments 57; Nonfinancial Public Corporations 14; Financial Public Corporations 0; Other 0 - Latin America: Central Government Budget 86; Extrabudgetary Funds 14; Regional and Local governments 29; Nonfinancial Public Corporations 57; Financial Public Corporations 14; Other 14 - By Income: - Developing: Central Government Budget 92; Extrabudgetary Funds 17; Regional and Local governments 38; Nonfinancial Public Corporations 13; Financial Public Corporations 0; Other 0 - Emerging: Central Government Budget 100; Extrabudgetary Funds 38; Regional and Local governments 75; Nonfinancial Public Corporations 13; Financial Public Corporations 19; Other 0 - Advanced or G-20: Central Government Budget 100; Extrabudgetary Funds 38; Regional and Local governments 88; Nonfinancial Public Corporations 50; Financial Public Corporations 25; Other 0 - All: Central Government Budget 96; Extrabudgetary Funds 27; Regional and Local governments 58; Nonfinancial Public Corporations 19; Financial Public Corporations 10; Other 8 - of which, program 95 36 59 14 5 0 - of which, non-program 96 19 58 23 15 15 ### Timeliness and periodicity of fiscal data (Table A2) - Periodicity (Month / Quarter / Annual / Other) and Timeliness (No More than One Month / No More than one Quarter / No More than Six Months / No More than One Year) - By Region: - Africa: Month 50; Quarter 33; Annual 8; Other 8; No More than One Month 17; No More than one Quarter 58; No More than Six Months 17; No More than One Year 8 - Asia and Pacific: Month 83; Quarter 17; Annual 0; Other 0; No More than One Month 67; No More than one Quarter 33; No More than Six Months 0; No More than One Year 0 - Europe: Month 63; Quarter 25; Annual 6; Other 6; No More than One Month 44; No More than one Quarter 50; No More than Six Months 6; No More than One Year 0 - Middle East and Central Asia: Month 43; Quarter 29; Annual 0; Other 29; No More than One Month 33; No More than one Quarter 67; No More than Six Months 0; No More than One Year 0 - Latin America: Month 57; Quarter 29; Annual 0; Other 14; No More than One Month 14; No More than one Quarter 86; No More than Six Months 0; No More than One Year 0 - By Income: - Developing: Month 46; Quarter 33; Annual 4; Other 17; No More than One Month 26; No More than one Quarter 61; No More than Six Months 9; No More than One Year 4 - Emerging: Month 56; Quarter 31; Annual 6; Other 6; No More than One Month 38; No More than one Quarter 56; No More than Six Months 6; No More than One Year 0 - Advanced or G-20: Month 100; Quarter 0; Annual 0; Other 0; No More than One Month 50; No More than one Quarter 50; No More than Six Months 0; No More than One Year 0 - All: Month 58; Quarter 27; Annual 4; Other 10; No More than One Month 34; No More than one Quarter 57; No More than Six Months 6; No More than One Year 2 - of which, program 64 18 5 14 36 59 5 0 - of which, non-program 54 35 4 8 32 56 8 4 ### Reliability of fiscal data — key concerns - Quasi-fiscal activities: - 75 percent of sampled countries were perceived to have known quasi-fiscal activity conducted outside reported fiscal data. - Subsidized lending and/or bank recapitalization was reported in 50 percent of countries. - Governments charging less than commercial prices for goods (fuel, electricity, water) was reported in 44 percent of countries. - Statistical discrepancy: - 35 percent of countries were determined to have a significant discrepancy (greater than 1 percent of GDP) between the government‘s overall balance and its financing data for the highest reported level of consolidation. - Significant discrepancies were especially common in Latin America (80 percent) and Asia-Pacific (50 percent). - Discrepancies were most often attributed to differences in both coverage and accounting bases between monetary and fiscal statistics and the presence of extrabudgetary operations not captured in revenue and expenditure data. ### Transactions and institutions as sources of fiscal risk (Table A3) — selected figures - By Transaction (All): - Budgeted taxes and spending 60; Unfunded civil service pensions 27; Extrabudgetary spending 52; Quasi-fiscal activities 54; Social policy obligations 44; Commodity prices 46; Financial transactions 27; Government guarantees 46; Public private partnerships 15; Other 21 - By Institution (All): - Central government 62; Extrabudgetary funds 27; Social security 38; Subnational governments 31; Nonfinancial public corporations 60; The financial sector 37; Other 4 - By Region — Transactions (selected): - Africa: Budgeted taxes and spending 75; Quasi-fiscal activities 67; Commodity prices 92; Financial transactions 17; Government guarantees 42; Public private partnerships 33; Other 25 - Asia and Pacific: Budgeted taxes and spending 17; Quasi-fiscal activities 50; Commodity prices 67; Financial transactions 50; Government guarantees 50; Public private partnerships 0; Other 33 - Europe: Budgeted taxes and spending 69; Quasi-fiscal activities 38; Commodity prices 75; Financial transactions 6; Government guarantees 31; Public private partnerships 44; Other 13 - Middle East and Central Asia: Budgeted taxes and spending 71; Quasi-fiscal activities 57; Commodity prices 43; Financial transactions 14; Government guarantees 29; Public private partnerships 14; Other 29 - Latin America: Budgeted taxes and spending 43; Quasi-fiscal activities 71; Commodity prices 43; Financial transactions 29; Government guarantees 71; Public private partnerships 0; Other 0 - By Income Level — Institutions (selected): - Developing: Central government 71; Extrabudgetary funds 33; Social security 29; Subnational governments 33; Nonfinancial public corporations 75; The financial sector 38; Other 4 - Emerging: Central government 63; Extrabudgetary funds 31; Social security 44; Subnational governments 31; Nonfinancial public corporations 56; The financial sector 44; Other 6 - Advanced or G-20: Central government 63; Extrabudgetary funds 13; Social security 75; Subnational governments 38; Nonfinancial public corporations 50; The financial sector 38; Other 0 - All (breakdown of program vs non-program provided in source): - of which, program (Transactions) 82 27 55 45 32 45 36 50 18 18 - of which, program (Institutions) 76 43 38 33 67 38 0 - of which, non-program (Transactions) 42 27 50 62 54 46 19 42 12 23 - of which, non-program (Institutions) 58 19 42 31 65 38 8 ### Sources and management of fiscal risks; disclosure practices (Table A4) - Alternative macro-economic scenarios: - All: 10 - By Region: Africa 0; Asia and Pacific 0; Europe 25; Middle East and Central Asia 14; Latin America 0 - By Income Level: Developing 4; Emerging 6; Advanced 38 - of which, program 14; of which, non-program 4 - Alternative fiscal scenarios: - All: 8 - By Region: Africa 0; Asia and Pacific 0; Europe 25; Middle East and Central Asia 0; Latin America 0 - By Income Level: Developing 0; Emerging 6; Advanced 38 - of which, program 10; of which, non-program 4 - Qualitative statement of fiscal risks: - All: 23 - By Region: Africa 8; Asia and Pacific 17; Europe 38; Middle East and Central Asia 29; Latin America 14 - By Income Level: Developing 8; Emerging 31; Advanced 50 - of which, program 24; of which, non-program 19 - Quantified statement of fiscal risks: - All: 10 - By Region: Africa 0; Asia and Pacific 33; Europe 6; Middle East and Central Asia 14; Latin America 14 - By Income Level: Developing 4; Emerging 13; Advanced 25 - of which, program 5; of which, non-program 12 - None (no fiscal risk statement): - All: 67 - By Region: Africa 92; Asia and Pacific 67; Europe 44; Middle East and Central Asia 71; Latin America 71 - By Income Level: Developing 92; Emerging 63; Advanced 38 - of which, program 76; of which, non-program 62 - Additional summary points: - Only 10 percent of countries sampled produce alternative macroeconomic scenarios and only 8 percent produced alternative fiscal scenarios. - 38 percent of advanced and G-20 countries provided alternative macro-fiscal scenarios, compared with 6 percent of emerging and none of developing countries. - Two-thirds of countries sampled did not publish fiscal risk statements of any kind. - Of countries that did publish fiscal risk statements, 23 percent produced qualitative descriptions and 10 percent produced quantified statements. *Italicized source: Excerpt from IMF document _080712 - 50. In its capacity building activities, the Fund can help governments foster strong (PDF chapter/section).* ### APPENDIX II: REVIEW OF FISCAL ROSCS IN CRISIS-HIT COUNTRIES ### APPENDIX II: REVIEW OF FISCAL ROSCS IN CRISIS-HIT COUNTRIES ### Scope and review questions - Of the ten countries that experienced the largest increase in government liabilities during the crisis, eight had undergone a Fiscal Transparency ROSC within the previous eight years. - The review focused on: - What criteria the ROSCs used to judge the level of transparency and what evidence supported those judgments. - Whether ROSCs identified the key transparency problems revealed by the crisis, the prominence given to these problems, and whether their relative seriousness was analyzed. - Whether ROSC recommendations were implemented by authorities and whether subsequent Article IV staff reports assessed progress in implementation of ROSC recommendations. ### Germany (ROSC in 2003) - ROSC finding: - Concluded Germany had achieved "a high level of fiscal transparency." - Cited a comprehensive, precise and carefully respected body of fiscal laws and regulations assigning roles and responsibilities and setting standards for budgeting, accounting and reporting at all levels of government. - Required disclosure of cash revenue and expenditure, contingent liabilities, guarantees, tax expenditures, and equity holdings. - Identified concerns: - Extensive public ownership of financial institutions at all levels; institutions often conduct quasi-fiscal activities. - Examples: loans not strictly screened on creditworthiness; many public financial institutions enjoyed a government guarantee over all liabilities contributing to very good credit ratings. - Quasi-fiscal activities did not appear extensive but their costs were not estimated nor included in budget documents. - Budget documents should provide more in-depth information on macrofiscal strategy, risks and structural trends. - Lack of a legally binding mechanism for committing the government to achieving its general government deficit and debt targets; called for greater clarity regarding performance under the Maastricht Treaty. - Developments noted: - Many quasi-fiscal activities transferred to specialist development banks since the ROSC. - Issue of fiscal rule partly addressed by adoption of the so-called debt-brake rule in the German Constitution. - Follow-up: - Subsequent Article IVs were silent on implementation of ROSC recommendations. ### France (ROSC in 2000 with three updates over four years) - ROSC finding: - Found France had achieved a high level of fiscal transparency; very high standards in most aspects of the code. - Focused on improvements: more complete information on government assets and liabilities, disclosure of contingent liabilities, and change in accounting standards toward accrual principles in a number of areas. - Assessment largely borne out during the crisis: almost all increase in debt was due to the output shock, with relatively small transparency-related factors. - Identified concerns: - Need for clearer identification and reporting of quasi-fiscal activities in budget presentation. - Better presentation of fiscal activity outside the appropriation process (contingent liabilities, quasi-fiscal activity, tax expenditures). - Improvement in reconciliation of stated policies with outcomes at the general government level. - Reports did not provide magnitudes or priorities of these issues nor how to resolve them. - Developments noted: - Many issues addressed in the Loi Organique aux Lois de Finances (LOLF), fully effective on January 1, 2006. - LOLF: multi-annual framework reported in the economic, social, and financial report attached to the Budget Act; first multi-annual fiscal framework law adopted in 2009. - LOLF strengthened parliamentary oversight, confirmed implementation of accrual-basis accounting, and broadened information requirements. - ROSC updates (2001–2004) detailed improvements (analysis of taxes and social security contributions, expenditure analysis, principle of sincerity, results-based expenditure appropriation). - Follow-up: - ROSC recommendations were featured in subsequent Article IV reports; updates focused on government actions with little follow-up on remaining problem areas. ### Greece (ROSCs between 1999 and 2006: six ROSCs including two full reports and four updates) - ROSC findings and recommendations: - 1999 "experimental" ROSC: appreciative of progress; recommended clarifying treatment of public corporations, investment, quasi-fiscal activities, and state assets; clearly state accounting basis; recommended "a comprehensive analysis of the sustainability of the government's fiscal position in the budget report." - 2005 full report: noted progress in public availability of information but raised specific deficiencies: lack of a consolidated budget covering ordinary, investment, and military expenditure; large number of extrabudgetary funds; inadequate coverage, timeliness and reliability of general government fiscal reporting; lack of control over expenditure commitments and arrears; inadequate assessment of fiscal risk; lack of systematic analysis/monitoring of fiscal policy objectives. - Key limitation: - ROSCs identified many deficiencies contributing to the fiscal crisis but did not attempt to quantify or estimate their relative fiscal costs. - Follow-up in Article IVs: - Between 1999 and 2005, Article IV reports consistently reported key ROSC recommendations without clear follow-up on implementation. - 1999 Article IV summarized ROSC recommendations; 2004 staff report emphasized timely and accurate fiscal data and reinforcing integrity of fiscal accounts; 2005 staff report contained a box on key recommendations of the 2005 reassessment (published standalone). - After 2005, Article IV reports were silent about ROSC findings and no further follow up was requested. ### Netherlands (ROSC in December 2005) - ROSC finding: - Netherlands met or exceeded good practice against each of the four general principles of the Code. - Identified concerns: - Ensure consistent fiscal reporting across general government to facilitate compliance with ESA 95. - Place more emphasis on scrutiny and reporting of fiscal developments in the local government sector. - More strictly monitor financial decisions of line ministries, particularly regarding PPPs. - No explicit analysis of fiscal-financial sector linkage beyond relation between government and public financial corporations; public financial corporations operated in dedicated market segments with some quasi-fiscal activity. - State ownership of some banks implied an implicit guarantee for their funding activities. - Follow-up: - 2006 Article IV summarized ROSC recommendations and noted they were under consideration by the official working group contemplating a fiscal strategy. - 2007 Article IV reiterated the ROSC's key message and noted many new refinements to the fiscal framework were in line with earlier staff recommendations though not directly tied to specific ROSC recommendations. ### Portugal (ROSC in 2003) - ROSC finding: - Portugal met the requirements of the fiscal transparency code in several areas and was making significant progress in strengthening fiscal management and transparency. - Cited clear allocation of responsibilities between levels of government and relatively stable intergovernmental fiscal relations; budget process based on a clear legal framework; adequate mechanisms of internal and external control; new budget framework legislation improving fiscal coordination, accounting and reporting across all levels of general government. - Identified shortcomings (many revealed by the crisis): - Lack of focus on institutions on the periphery of the general government sector (PPPs and SOEs) that were subsequently reclassified into the general government. - Lack of a sound medium-term budgetary framework, resulting in continued fiscal drift over the decade as longer-term fiscal objectives were consistently missed. - Weaknesses in budget execution, reporting and accounting processes, resulting in a large and unobserved build up in expenditure arrears. - Follow-up: - The 2003 Article IV report noted briefly that implementing ROSC recommendations could facilitate efficient achievement of fiscal objectives. ### Spain (ROSC in 2005) - ROSC finding: - Noted significant progress in strengthening fiscal institutions and disseminating information on government operations. - Legal framework clearly delineated scope and responsibilities of general government and subsectors, including relations with public corporations. - Identified concerns and recommendations: - Lack of timely information on fiscal decisions and accounts of the subnational tier. - Recommended systematic quantification and transparent disclosure of medium- to long-term fiscal costs and risks associated with PPPs at all levels of government in budgetary documentation and inclusion in fiscal scenarios and long-term projections. - Recommended improved analysis of fiscal risks and contingencies in budget documents. - Follow-up: - 2006 Article IV noted some progress on 2005 ROSC recommendations but considerable scope remained for more extensive and timely publication of territorial governments' fiscal data (budget execution, quasi-fiscal activities, contingent liabilities). - 2007 Article IV reiterated that strengthened transparency and monitoring remain the most effective means to secure fiscal discipline at regional and local levels. ### United Kingdom (experimental ROSC in March 1999 covering eight codes and standards including fiscal transparency) - ROSC finding: - Found the UK had achieved a "very high level of transparency," though the basis for the absolute or comparative standard used was unclear. - Identified concerns: - Estimates of contingent liabilities, tax expenditures, and quasi-fiscal activities were not integrated into budget documents; no attempt to estimate importance of these fiscal risks other than to say quasi-fiscal activities were "not significant." - Limited exploration of alternative macro-fiscal scenarios, large implicit contingent liabilities to the domestic private financial sector, and growing exposure to PPP liabilities revealed during the crisis were not explicitly discussed. - Follow-up: - 2000 Article IV mentioned the 1999 ROSC and noted fiscal transparency had improved since the assessment (including fuller reporting of tax expenditures). - Article IV emphasized needed improvements in budget reporting, notably the absence of regular treasury reports analyzing fiscal performance during the year relative to expectations. ### United States (ROSC in 2003) - ROSC finding: - Found the U.S. "fully compliant with most elements of the Fund's Code, and sets best practice standards in many areas." - Praised clarity of roles and responsibilities under the U.S. Constitution, openness of the budget process, and quality and scope of budget documentation including detailed sensitivity analysis. - Identified concerns: - Lack of clarity over longer-term direction of fiscal policy. - Complexity of the congressional budget process. - Need for greater information on costs and risks associated with GSEs such as Fannie Mae and Freddie Mac and other contingent liabilities. - Developments and follow-up: - Since the ROSC, little concrete progress in addressing these weaknesses despite attempts by administration, congress, and third parties. - In the wake of the crisis, these issues complicated fiscal policymaking. - The Fund's 2003 Article IV contained a box on key recommendations of the ROSC; subsequent Article IV reports have raised concerns over the GSEs and institutional issues. ### Cross-cutting observations from the country reviews - Commonly identified weaknesses across multiple ROSCs: - Insufficient integration and disclosure of contingent liabilities, quasi-fiscal activities, PPPs, and off-budget entities or extrabudgetary funds. - Gaps in consolidated reporting across general government and between central and subnational tiers. - Weaknesses in timely, reliable, and comprehensive fiscal reporting, including budget execution, commitments, and arrears. - Lack of systematic quantification of fiscal risks and failure to estimate relative fiscal costs of identified transparency shortcomings. - Need for stronger medium-term frameworks, legal commitment mechanisms, and better presentation of macrofiscal strategy and structural trends. - Follow-up and implementation patterns: - Implementation of ROSC recommendations varied by country and topic; some countries enacted significant reforms (e.g., France's LOLF, Germany's debt-brake constitutional rule, transfers of quasi-fiscal activities to specialist development banks). - Article IV reports sometimes summarized ROSC recommendations, but follow-up assessments and systematic monitoring of implementation were uneven; several Article IVs were silent after initial reporting. - Limitation in ROSC practice observed in the reviews: - Many ROSCs identified problems qualitatively but did not quantify the magnitudes or prioritize reform actions by fiscal cost or risk, limiting assessment of relative seriousness and policy prioritization. *Source: APPENDIX II: REVIEW OF FISCAL ROSCS IN CRISIS-HIT COUNTRIES* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2012/_080712.pdf_