Posted by Sailendra Pattanayak[1]
The IMF has just published a new Fiscal Transparency Code which replaces the earlier 2007 version. The new Code sets the standards for the disclosure of information on governments’ financial positions, prospects and risks, and is built around four pillars covering the key elements of fiscal transparency. These pillars are: (i) fiscal reporting; (ii) fiscal forecasting and budgeting; (iii) fiscal risk analysis and management; and (iv) resource revenue management. While the first three pillars of the new Code, containing 36 principles, have been published [ Download FT CODE (PDF)], the fourth pillar on resource revenue management will be completed by mid 2015 following a separate consultation process with key stakeholders.
A new fiscal transparency evaluation (FTE) will replace the Fiscal Reports on the Observance of Standards and Codes (or Fiscal ROSCs) as the principal tool for assessing country fiscal transparency practices against the standards set by the new Code. The FTE provides countries with a clear and quantified assessment, including a set of heat maps to facilitate benchmarking against comparator countries. It also offers an option to specify a fiscal transparency action plan with a concrete sequence of steps involved in implementing the FTE recommendations. Eight pilot FTEs have been conducted to date, covering four regions, and four of these reports have already been published [Costa Rica, Ireland, Russia, and Bolivia (PDF)].
The new Fiscal Transparency Code and Evaluation, described in a recently published IMF Survey Article [available here], aim to improve fiscal disclosure and management in countries at all income levels. They address the weaknesses of the 2007 Code and Fiscal ROSC discussed in the 2012 paper Fiscal Transparency, Accountability, and Risk. They are designed to ensure that policymakers, legislators, citizens, and markets have a complete picture of the state of public finances, covering the entire public sector, incorporating accurate and comprehensive fiscal forecasts, and recognizing all major fiscal risks. The new Code and FTE complement other standards and diagnostic tools in the fiscal area (such as the PEFA framework, the Open Budget Index, and the Tax Administration Diagnostic Assessment Tool). They also reflect feedback from governments, civil society, academics, market participants, and the public received through two rounds of consultation in December 2012 and July 2013.
To provide more detailed guidance on the implementation of new Code’s principles and practices, the IMF is developing a revised Fiscal Transparency Manual, with public consultation and publication planned over the course of 2015.
[1] Fiscal Affairs Department, IMF.
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