The Timing of the Government’s Fiscal Year

Guohua Huang, Holger van Eden

October 20, 2016


Posted by Guohua Huang and Holger van Eden[1]

What is the best fiscal year from an economic and public management perspective? It’s a question not often asked, as it seems a topic that has been resolved by history, tradition and common sense. However, in fact governments around the world have adopted different fiscal years (FYs). The Gregorian calendar year is used by about 70 percent of IMF member countries; the end dates of the 1st, 2nd, and 3rd quarters of the calendar year are used by most other countries. A few use a religious calendar. Examples include:  

The timing of the governments’ fiscal year has evolved over the years and has been influenced by historic, political, economic, and climate-related factors. Aside from the tradition of following the calendar year – usually shared with many other national institutions and processes, a number of other influences can also be noted:

During the past decades, only a few industrial and developing countries have changed their FY.

The transition to a new FY in these countries was generally smooth, but some costs were incurred in re-configuring the budget process and the accounting system; training staff in departments and agencies on the revised calendars for financial reporting and auditing; and changing timelines in procurement planning, contracting, etc.

If a government decides to change its FY in order to better accommodate its business cycle, it may not be necessary to amend the arrangements for collecting revenues or for planning and executing the budget. If the change is motivated by other considerations, however, most business processes of government would need to shift in time as well. It is quite difficult to assess the level of cost and disruptiveness of these changes to the government’s business cycle, and to the wider economy, but they may be substantial.  

[1] Guohua Huang is Technical Assistance Advisor in the Public Financial Management II Division in the IMF's Fiscal Affairs Department. Holger van Eden is Deputy Division Chief in the same division and co-editor of the PFM Blog.

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.