How Does the IMF Encourage Greater Fiscal Transparency?
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- Published: February 2, 2023
- Last updated: April 2025
What is fiscal transparency?
- Fiscal transparency is defined as comprehensive, transparent, reliable, and timely public reporting on the state of public finances.
- It is critical for effective fiscal management and accountability by:
- ensuring governments have an accurate picture of their finances when making economic decisions, including the costs and benefits of policy changes and potential risks to public finances;
- providing legislatures, markets, and citizens with information needed to hold governments accountable;
- strengthening the credibility of a country’s fiscal plans and underpinning market confidence and market perceptions of fiscal solvency.
- By highlighting risks to fiscal positions and the fiscal outlook, fiscal transparency supports a timely and smooth response to changing economic conditions, reducing the incidence and severity of crises and promoting financial and economic stability.
How does the IMF support fiscal transparency?
- The IMF’s Fiscal Transparency Code is the international standard for disclosing information about public finances and guides transparency practices in IMF member countries.
- The Code is the basis for Fiscal Transparency Evaluations (FTEs), which support member countries in strengthening fiscal surveillance, accountability, and management.
- The Fiscal Transparency Handbook:
- Volume 1 covers the first three pillars and provides practical guidance on implementation along with examples of practices around the world.
- Volume 2, covering natural resources, will be issued.
The IMF’s Fiscal Transparency Code: pillars and practice levels
- The Code differentiates between basic, good, and advanced practices for four fiscal transparency pillars:
1. Fiscal reporting should offer relevant, comprehensive, timely, and reliable information on the government’s financial position and performance. 2. Fiscal forecasting and budgeting should provide a clear statement of the government’s budgetary objectives and policy intentions, together with comprehensive, timely, credible projections of public finances. 3. Fiscal risk analysis and management should ensure that risks to public finances are disclosed, analyzed, and managed, and that fiscal decision-making across the public sector is effectively coordinated. 4. Resource revenue management should provide a transparent framework for the ownership, contracting, taxation, and utilization of natural resources.
Fiscal Transparency Evaluations (FTEs)
- FTEs are the IMF’s main diagnostic tool for fiscal transparency.
- Key features:
- Voluntary exercises conducted upon request by a member country.
- Provide a comprehensive assessment of fiscal transparency practices following the Fiscal Transparency Code.
- Assessments may cover all four pillars or individual pillars, allowing countries to tailor their FTEs to areas of specific interest.
- Countries that undertake FTEs receive:
- analysis on the scale and sources of fiscal vulnerability;
- a summary of fiscal transparency strengths;
- proposals to address fiscal transparency shortcomings.
- Implementation status:
- FTEs have been conducted in almost 40 countries to date, across a wide range of regions and income levels.
- Additional FTEs are planned.