Fiscal Transparency

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Fiscal transparency is defined as "the comprehensiveness, clarity, reliability, timeliness, and relevance of public reporting on the past, present, and future state of public finances."
It supports effective fiscal management and accountability by helping governments form an accurate picture of their finances when making economic decisions, including the costs and benefits of policy changes and potential risks to public finances.
It provides legislatures, markets, and citizens with the information needed to hold governments accountable.
Greater fiscal transparency can strengthen the credibility of a country’s fiscal plans and help underpin market confidence and market perceptions of fiscal solvency.

The IMF’s Fiscal Transparency Code (the Code) is presented as the international standard for disclosure of information about public finances.
The Code comprises a set of principles built around four pillars:
- (i) fiscal reporting;
- (ii) fiscal forecasting and budgeting;
- (iii) fiscal risk analysis and management;
- (iv) resource revenue management.
For each transparency principle, the Code differentiates between "basic", "good", and "advanced" practices to provide countries with clear milestones toward full compliance and to ensure applicability across IMF member countries.
Pillars I-III were issued in 2014, while Pillar IV was finalized in January 2019, following two rounds of public consultation and testing in several countries.

FTEs are described as the IMF’s fiscal transparency diagnostic.
FTEs provide countries with:
- a comprehensive assessment of their fiscal transparency practices against the differentiated standards set by the Code;
- rigorous analysis of the scale and sources of fiscal vulnerability based on a set of fiscal transparency indicators;
- a more complete picture of public sector activities by estimating the financial position of the entire public sector;
- a visual account of their fiscal transparency strengths and reform priorities through summary heat maps;
- targeted recommendations to improve fiscal transparency and the option of a sequenced fiscal transparency action plan to help implementation.
FTEs are carried out at the request of countries and support capacity building, including the prioritization and delivery of IMF technical assistance.
FTEs have been conducted in over 30 countries to date, across a wide range of regions and income levels, and additional FTEs are planned.

The results of FTEs and related work show there is scope for countries to improve their transparency practices, in particular by:
- expanding the coverage of fiscal reports;
- strengthening the credibility of budget frameworks;
- improving the disclosure and management of fiscal risks.