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Fiscal transparency – the comprehensiveness, clarity, reliability, timeliness, and relevance of public reporting on the past, present, and future state of public finances – is critical for effective fiscal management and accountability. It helps ensure that governments have an accurate picture of their finances when making economic decisions, including of the costs and benefits of policy changes and potential risks to public finances. It also provides legislatures, markets, and citizens with the information they need to hold governments accountable.
The Fiscal Transparency Code and Evaluation are the key elements of the IMF’s ongoing efforts to strengthen fiscal surveillance, policymaking, and accountability among its member countries.
Fiscal Transparency Code
The IMF’s Fiscal Transparency Code (the Code) is the international standard for disclosure of information about public finances. The Code comprises a set of principles built around four pillars (Figure below): (i) fiscal reporting; (ii) fiscal forecasting and budgeting; (iii) fiscal risk analysis and management; and (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 with the Code and ensure its applicability to the broad range of IMF member countries. Pillars I-III have been issued while a draft of Pillar IV is under public consultation.
Four Pillars of the Fiscal Transparency Code
Fiscal Transparency Evaluation
Fiscal Transparency Evaluations (FTEs) are 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 visual account of their fiscal transparency strengths and reform priorities through summary heat maps;
- a sequenced fiscal transparency action plan to help them address those reform priorities; and
- the option of undertaking a modular assessment focused on just one Pillar of the Code.
FTEs are carried out at the request of countries. They also support capacity building, including the prioritization and delivery of IMF technical assistance. A number of FTEs have been conducted to date in countries across a wide range of regions and income levels and additional FTEs are underway. The IMF’s Fiscal Affairs Department would welcome interest from countries interested in undertaking an FTE.
Fiscal Transparency Manual and Natural Resource Guide
A revised Fiscal Transparency Manual is under preparation that will provide more detailed guidance on the implementation of the Fiscal Transparency Code’s principles and practices. Volume I of the Manual will cover the Code’s Pillars I, II and III, while Volume II will focus on Pillar IV and integrate the previously separate “Guide on Resource Revenue Transparency.” The IMF will launch public consultation on drafts of the Manual in the course of 2015 to seek inputs and suggestions from a broad range of stakeholders.
UPDATE: Comments received January – May 2015