{
  "title": "Fiscal Transparency, Fiscal Performance and Credit Ratings",
  "publication": "IMF Working Papers, June 1, 2012",
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  "summary": "This paper investigates the effect of fiscal transparency on market assessments of sovereign risk, as measured by credit ratings.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Objective: Investigates the effect of fiscal transparency on market assessments of sovereign risk, as measured by credit ratings.\n- Channels analyzed:\n  - Direct channel: uncertainty reduction.\n  - Indirect channel: better fiscal policies and outcomes.\n- Country groups differentiated: advanced economies and developing economies.\n- Fiscal transparency measure: an index based on the IMF’s Reports on the Observance of Standards and Codes (ROSCs)."
    },
    {
      "heading": "Key findings",
      "content": "- Fiscal transparency has a positive and significant effect on credit ratings.\n- Channel differences by country group:\n  - Advanced economies: the indirect effect of transparency through better fiscal outcomes is more significant.\n  - Developing economies: the direct uncertainty-reducing effect of transparency is more relevant.\n- Magnitude: a one standard deviation improvement in the fiscal transparency index is associated with an increase in credit ratings by:\n  - 0.7 notches in advanced economies.\n  - 1 notches in developing economies."
    },
    {
      "heading": "Methodology (as described)",
      "content": "- Exposure of interest: fiscal transparency index derived from ROSCs.\n- Outcome: sovereign credit ratings (market assessments of sovereign risk).\n- Analytical strategy: decomposes transparency’s impact into direct uncertainty-reduction and indirect effects operating through fiscal policies and outcomes; differentiates results for advanced versus developing economies."
    },
    {
      "heading": "Policy implications and interpretation",
      "content": "- Improving fiscal transparency can enhance sovereign creditworthiness via two mechanisms:\n  - Strengthening fiscal outcomes (particularly influential in advanced economies).\n  - Reducing uncertainty perceived by markets (particularly influential in developing economies).\n- Reforms to boost ROSC-based transparency indicators could yield measurable improvements in sovereign ratings, with potentially different priorities depending on country income/development status.\n\n---\n\n Content in this bundle\n\n- Wp12156\n  - Wp12156 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Wp12156 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/fiscal-transparency-fiscal-performance-and-credit-ratings-25996"
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    "Authors: Julio Escolano, Elif C Arbatli Saxegaard",
    "Published: June 1, 2012",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781475504477.001",
    "Objective: Investigates the effect of fiscal transparency on market assessments of sovereign risk, as measured by credit ratings.",
    "Channels analyzed:",
    "Country groups differentiated: advanced economies and developing economies.",
    "Fiscal transparency measure: an index based on the IMF’s Reports on the Observance of Standards and Codes (ROSCs).",
    "Fiscal transparency has a positive and significant effect on credit ratings.",
    "Channel differences by country group:",
    "Magnitude: a one standard deviation improvement in the fiscal transparency index is associated with an increase in credit ratings by:",
    "Exposure of interest: fiscal transparency index derived from ROSCs.",
    "Outcome: sovereign credit ratings (market assessments of sovereign risk).",
    "Analytical strategy: decomposes transparency’s impact into direct uncertainty-reduction and indirect effects operating through fiscal policies and outcomes; differentiates results for advanced versus developing economies.",
    "Improving fiscal transparency can enhance sovereign creditworthiness via two mechanisms:",
    "Reforms to boost ROSC-based transparency indicators could yield measurable improvements in sovereign ratings, with potentially different priorities depending on country income/development status.",
    "**Wp12156**"
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