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Revisiting the Benefits of Fiscal Transparency

Raquel Ferreira, Juan Pablo Guerrero

August 29, 2022

 

The recent release of the International Budget Partnership’s 2021 Open Budget Survey is a timely reminder that fiscal transparency improvements need to be actively pursued by governments if they are to gain traction. It is especially important that the publication of quality information across the fiscal policy cycle becomes embedded in a government’s routine operations. However, what motivates a country to start on this fiscal transparency journey and then to continually pursue improvements?

There are many answers to this question, some simpler than others. A basic one, on the assumption that politicians and public officials want what is best for the development of their countries, is that fiscal transparency contributes to this development and importantly that its benefits outweigh its costs. Governments have scarce resources to work with, and naturally want to get bangs for their bucks.

Several studies over the years have shown a generally positive association between fiscal transparency and improved fiscal policy outcomes, governance, as well as many socio-economic and human development indicators. Having this evidence helps convince observers that our constant push for fiscal transparency is based on established facts and not wishful thinking. As such, GIFT welcomes the publication of the most recent comprehensive study by Martin Haus, Paolo de Renzio and Joachim Wehner -  “(When) Do Open Budgets Transform Lives? Progress and Next Steps in Fiscal Openness Research”. This paper is a timely update of the first comprehensive review of the topic by two of these authors, published in 2015 - “The Impacts of Fiscal Openness: A Review of the Evidence”.

This research creates an opportunity to revisit the many benefits of fiscal transparency and to broaden public awareness of these benefits. In brief, studies have shown that fiscal transparency leads to:

Thus, the evidence points to numerous potential benefits waiting to be secured. The fact that much improved fiscal transparency has been achieved by many countries across the globe at different levels of development, also means that it is attainable when there is a political will. Help us spread the word in motivating those who may still need convincing!

 

[1] Raquel Ferreira is Senior Technical Advisor at the Global Initiative for Fiscal Transparency (GIFT); Juan Pablo Guerrero is GIFT’s Director.

 

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.

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