Appendix II Revised Code of Good Practices on Fiscal Transparency (2007)
Author:
International Monetary Fund
Search for other papers by International Monetary Fund in
Current site
Google Scholar
Close

Abstract

1.1 The government sector should be distinguished from the rest of the public sector and from the rest of the economy, and policy and management roles within the public sector should be clear and publicly disclosed.

I. Clarity of Roles and Responsibilities

1.1 The government sector should be distinguished from the rest of the public sector and from the rest of the economy, and policy and management roles within the public sector should be clear and publicly disclosed.

  • 1.1.1 The structure and functions of government should be clear.

  • 1.1.2 The fiscal powers of the executive, legislative, and judicial branches of government should be well defined.

  • 1.1.3 The responsibilities of different levels of government, and the relationships between them, should be clearly specified.

  • 1.1.4 Relationships between the government and public corporations should be based on clear arrangements.

  • 1.1.5 Government relationships with the private sector should be conducted in an open manner, following clear rules and procedures.

1.2 There should be a clear and open legal, regulatory, and administrative framework for fiscal management.

  • 1.2.1 The collection, commitment, and use of public funds should be governed by comprehensive budget, tax, and other public finance laws, regulations, and administrative procedures.

  • 1.2.2 Laws and regulations related to the collection of tax and nontax revenues, and the criteria guiding administrative discretion in their application, should be accessible, clear, and understandable. Appeals of tax or non-tax obligations should be considered in a timely manner.

  • 1.2.3 There should be sufficient time for consultation about proposed laws and regulatory changes and, where feasible, broader policy changes.

  • 1.2.4 Contractual arrangements between the government and public or private entities, including resource companies and operators of government concessions, should be clear and publicly accessible.

  • 1.2.5 Government liability and asset management, including the granting of rights to use or exploit public assets, should have an explicit legal basis.

II. Open Budget Processes

2.1 Budget preparation should follow an established timetable and be guided by well-defined macroeconomic and fiscal policy objectives.

  • 2.1.1 A budget calendar should be specified and adhered to. Adequate time should be allowed for the draft budget to be considered by the legislature.

  • 2.1.2 The annual budget should be realistic, and should be prepared and presented within a comprehensive medium-term macroeconomic and fiscal policy framework. Fiscal targets and any fiscal rules should be clearly stated and explained.

  • 2.1.3 A description of major expenditure and revenue measures, and their contribution to policy objectives, should be provided. Estimates should also be provided of their current and future budgetary impact and their broader economic implications.

  • 2.1.4 The budget documentation should include an assessment of fiscal sustainability. The main assumptions about economic developments and policies should be realistic and clearly specified, and sensitivity analysis should be presented.

  • 2.1.5 There should be clear mechanisms for the coordination and management of budgetary and extrabudgetary activities within the overall fiscal policy framework.

2.2 There should be clear procedures for budget execution, monitoring, and reporting.

  • 2.2.1 The accounting system should provide a reliable basis for tracking revenues, commitments, payments, arrears, liabilities, and assets.

  • 2.2.2 A timely midyear report on budget developments should be presented to the legislature. More frequent updates, which should be at least quarterly, should be published.

  • 2.2.3 Supplementary revenue and expenditure proposals during the fiscal year should be presented to the legislature in a manner consistent with the original budget presentation.

  • 2.2.4 Audited final accounts and audit reports, including reconciliation with the approved budget, should be presented to the legislature and published within a year.

III. Public Availability of Information

3.1 The public should be provided with comprehensive information on past, current, and projected fiscal activity and on major fiscal risks.

  • 3.1.1 The budget documentation, including the final accounts, and other published fiscal reports should cover all budgetary and extrabudgetary activities of the central government.

  • 3.1.2 Information comparable to that in the annual budget should be provided for the outturns of at least the two preceding fiscal years, together with forecasts and sensitivity analysis for the main budget aggregates for at least two years following the budget.

  • 3.1.3 Statements describing the nature and fiscal significance of central government tax expenditures, contingent liabilities, and quasi-fiscal activities should be part of the budget documentation, together with an assessment of all other major fiscal risks.

  • 3.1.4 Receipts from all major revenue sources, including resource-related activities and foreign assistance, should be separately identified in the annual budget presentation.

  • 3.1.5 The central government should publish information on the level and composition of its debt and financial assets, significant nondebt liabilities (including pension rights, guarantee exposure, and other contractual obligations), and natural resource assets.

  • 3.1.6 The budget documentation should report the fiscal position of subnational governments and the finances of public corporations.

  • 3.1.7 The government should publish a periodic report on long-term public finances.

3.2 Fiscal information should be presented in a way that facilitates policy analysis and promotes accountability.

  • 3.2.1 A clear and simple summary guide to the budget should be widely distributed at the time of the annual budget.

  • 3.2.2 Fiscal data should be reported on a gross basis, distinguishing revenue, expenditure, and financing, with expenditure classified by economic, functional, and administrative category.

  • 3.2.3 The overall balance and gross debt of the general government, or their accrual equivalents, should be standard summary indicators of the government fiscal position. They should be supplemented, where appropriate, by other fiscal indicators, such as the primary balance, the public sector balance, and net debt.

  • 3.2.4 Results achieved relative to the objectives of major budget programs should be presented to the legislature annually.

3.3 A commitment should be made to the timely publication of fiscal information.

  • 3.3.1 The timely publication of fiscal information should be a legal obligation of government.

  • 3.3.2 Advance release calendars for fiscal information should be announced and adhered to.

IV. Assurances of Integrity

4.1 Fiscal data should meet accepted data quality standards.

  • 4.1.1 Budget forecasts and updates should reflect recent revenue and expenditure trends, underlying macroeconomic developments, and well-defined policy commitments.

  • 4.1.2 The annual budget and final accounts should indicate the accounting basis used in the compilation and presentation of fiscal data. Generally accepted accounting standards should be followed.

  • 4.1.3 Data in fiscal reports should be internally consistent and reconciled with relevant data from other sources. Major revisions to historical fiscal data and any changes to data classification should be explained.

4.2 Fiscal activities should be subject to effective internal oversight and safeguards.

  • 4.2.1 Ethical standards of behavior for public servants should be clear and well publicized.

  • 4.2.2 Public sector employment procedures and conditions should be documented and accessible to interested parties.

  • 4.2.3 Procurement regulations, meeting international standards, should be accessible and observed in practice.

  • 4.2.4 Purchases and sales of public assets should be undertaken in an open manner, and major transactions should be separately identified.

  • 4.2.5 Government activities and finances should be internally audited, and audit procedures should be open to review.

  • 4.2.6 The national revenue administration should be legally protected from political direction, ensure taxpayers’ rights, and report regularly to the public on its activities.

4.3 Fiscal information should be externally scrutinized.

  • 4.3.1 Public finances and policies should be subject to scrutiny by a national audit body or an equivalent organization that is independent of the executive.

  • 4.3.2 The national audit body or equivalent organization should submit all reports, including its annual report, to the legislature and publish them. Mechanisms should be in place to monitor follow-up actions.

  • 4.3.3 Independent experts should be invited to assess fiscal forecasts, the macroeconomic forecasts on which they are based, and their underlying assumptions.

  • 4.3.4 A national statistical body should be provided with the institutional independence to verify the quality of fiscal data.

  • Collapse
  • Expand
  • Acemoglu, Daron, Simon Johnson, and James A. Robinson, 2003, “An African Success Story: Botswana,” in In Search of Prosperity: Analytic Narratives on Economic Growth, ed. by Dani Rodrik (Princeton, New Jersey: Princeton University Press).

    • Search Google Scholar
    • Export Citation
  • Ahmad, Ehtisham, and Giorgio Brosio, eds., 2006, Handbook of Fiscal Federalism (Cheltenham, United Kingdom: Edward Elgar Press Company).

    • Search Google Scholar
    • Export Citation
  • Ahmad, Ehtisham, and Ali Mansoor, 2002, “Indonesia: Managing Decentralization,” in Fiscal Decentralization, ed. by Ehtisham Ahmad and Vito Tanzi (New York: Routledge).

    • Search Google Scholar
    • Export Citation
  • Ahmad, Ehtisham, and Eric Mottu, 2003, “Oil Revenue Assignments: Country Experiences and Issues,” in Fiscal Policy Formulation and Implementation in Oil-Producing Countries, ed. by J.M. Davis, R. Ossowski, and A. Fedelino (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Auty, Richard M., 1997, “Natural Resource Endowment, the State and Development Strategy,Journal of International Development, Vol. 9,No. 4, pp. 65163.

    • Search Google Scholar
    • Export Citation
  • Barnett, Steven, and Rolando Ossowski, 2003, “Operational Aspects of Fiscal Policy in Oil-Producing Countries,” in Fiscal Policy Formulation and Implementation in Oil-Producing Countries, ed. by J.M. Davis, R. Ossowski, and A. Fedelino (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Basu, Anupam, and Krishna Srinivasan, (2002), “Foreign Direct Investment in Africa-Some Case Studies,IMF Working Paper 02/61 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Birdsall, Nancy, and Arvind Subramanian, (2004), “Saving Iraq From Its Oil,Foreign Affairs, Vol. 83 (July/August).

  • British Petroleum (BP), (2006), Statistical Review of World Energy.

  • Brosio, Giorgio, (2003), “Oil Revenue and Fiscal Federalism,” in Fiscal Policy Formulation and Implementation in Oil-Producing Countries, ed. by J.M. Davis, R. Ossowski, and A. Fedelino (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Claessens, Stijn, and Panos Varangis, (1994), “Oil Price Instability, Hedging, and an Oil Stabilization Fund: The Case of Venezuela,Policy Research Working PaperNo. 1290 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Collier, Paul, (1999), “On the Economic Consequences of Civil War,Oxford Economic Papers, Vol. 51 (January, pp. 16883).

  • Collier, Paul, Hoeffler, Anke (2004), “The Challenge of Reducing the Global Incidence of Civil War,” paper presented at Copenhagen Consensus 2004.

    • Search Google Scholar
    • Export Citation
  • Cordes, John A., (1995), “An Introduction to the Taxation of Mineral Rents,” in The Taxation of Mineral Enterprises, ed. by James Otto (London: Graham & Trotman/Martinus Nijhoff).

    • Search Google Scholar
    • Export Citation
  • Daniel, James A., (2003), “Hedging Government Oil Price Risk,” in Fiscal Policy Formulation and Implementation in Oil-Producing Countries, ed. by J.M. Davis, R. Ossowski, and A. Fedelino (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Daniel, Philip, (1995), “Evaluating State Participation in Mineral Projects: Equity, Infrastructure and Taxation,” in The Taxation of Mineral Enterprises, ed. by James Otto (London: Graham & Trotman/Martinus Nijhoff).

    • Search Google Scholar
    • Export Citation
  • Daniel, Philip, 2002a, “Discussion Paper,presented at the Conference on Fiscal Policy and Implementation in Oil-Producing Countries at the International Monetary Fund, Washington DC, June.

    • Search Google Scholar
    • Export Citation
  • Daniel, Philip, 2002b, “Petroleum Revenue Management. An Overview,paper prepared for the World Bank, Washington DC, June.

  • Davis, Jeffrey, Rolando Ossowski, James A. Daniel, and Steven Barnett, (2003), “Stabilization and Savings Funds for Nonrenewable Resources: Experience and Fiscal Policy Implications,” in Fiscal Policy Formulation and Implementation in Oil-Producing Countries, ed. by J.M. Davis, R. Ossowski, and A. Fedelino (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Davis, Jeffrey, Rolando Ossowski, and Annalisa Fedelino, eds., (2003), Fiscal Policy Formulation and Implementation in Oil-Producing Countries (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Extractive Industries Transparency Initiative (EITI), (2003), Revised Draft Reporting Guidelines (London, May).

  • Extractive Industries Transparency Initiative (EITI), (2005), EITI Source Book (London, March).

  • Extractive Industries Transparency Initiative (EITI), (2006), Report of the International Advisory Group (London, September).

  • Global Witness, (2004), Time for Transparency: Coming Clean on Oil, Mining and Gas Revenues (Washington: Global Witness Publishing Inc.).

    • Search Google Scholar
    • Export Citation
  • Gupta, Sanjeev, Benedict Clements, Kevin Fletcher, and Gabriela Inchauste, (2003), “Issues in Domestic Petroleum Pricing in Oil-Producing Countries,” in Fiscal Policy Formulation and Implementation in Oil-Producing Countries, ed. by J.M. Davis, R. Ossowski, and A. Fedelino (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Hannesson, Rögnvaldur, (2001), Investing for Sustainability. The Management of Mineral Wealth (Norwell, Massachusetts: Kluwer).

  • Hausmann, Ricardo, and Roberto Rigobon, (2003), “An Alternative Interpretation of the ‘Resource Curse’ Theory and Policy Implications,NBER Working PaperNo. 9424 (Cambridge, Massachusetts: National Bureau for Economic Research).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2001a, Government Financial Statistics Manual 2001 (Washington).

  • International Monetary Fund, 2001b, Manual on Fiscal Transparency (Washington).

  • International Monetary Fund, (2004), Botswana: Selected Issues and Statistical Appendix, IMF Country Report No. 04/212 (Washington).

  • International Monetary Fund, 2007a, Manual on Fiscal Transparency (forthcoming; Washington).

  • International Monetary Fund, 2007b, “The Role of Fiscal Institutions in Managing the Oil Revenue Boom,” SM/07/88 (Washington).

  • Johnston, Daniel, (2004), “Petroleum Contract Analysis and Design State-of-the Art—State-of-the-Industry,” paper presented at the Petroleum Revenue Management Workshop, Joint UNDP/World Bank Energy Sector Management Assistance Program, Washington, March.

    • Search Google Scholar
    • Export Citation
  • Katz, Menachem, Ulrich Bartsch, Harinder Malothra, and Milan Cuc, eds., (2004), Lifting the Oil Curse: Improving Petroleum Revenue Management in Sub-Saharan Africa (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Kumar, Raj, (1995), “Mine Taxation: The Evolution of Fiscal Regimes,” in The Taxation of Mineral Enterprises, ed. by James Otto (London: Graham & Trotman/Martinus Nijhoff).

    • Search Google Scholar
    • Export Citation
  • Lederman, Daniel, and William F. Maloney, (2003), “Trade Structure and Growth,Policy Research Working PaperNo. 3025 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Lederman, Daniel, and William F. Maloney, (2007), Natural Resources: Neither Curse nor Destiny (Stanford, California: Stanford University Press).

    • Search Google Scholar
    • Export Citation
  • Martinez-Vazquez, Jorge, and Jameson Boex, (2000), Russia’s Transition to a New Federalism (Washington: World Bank).

  • McLure, Charles E., Jr., (2003), “The Assignment of Oil Tax Revenue,” in Fiscal Policy Formulation and Implementation in Oil-Producing Countries, ed. by J.M. Davis, R. Ossowski, and A. Fedelino (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • McPherson, Charles, (2003), “National Oil Companies: Evolution, Issues, Outlook,” in Fiscal Policy Formulation and Implementation in Oil-Producing Countries, ed. by J.M. Davis, R. Ossowski, and A. Fedelino (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • McPherson, Charles, and Stephen MacSearraigh, (2007), “Corruption in the Petroleum Sector,” in The Many Faces of Corruption: Tracking Vulnerabilities at the Sector Level, ed. by J. Edgardo Campos and Sanjay Pradhan (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Modise, Modise D., (2000), “Management of Mineral Revenues: The Botswana Experience,” paper presented at the UNCTAD Workshop on Growth and Diversification in Mineral Economies, Cape Town, South Africa, November.

    • Search Google Scholar
    • Export Citation
  • Oil Industry Accounting Committee, (2001), “Accounting for Oil and Gas Exploration, Development, Production and Decommissioning Activities,” Statement of Recommended Practice (London, June).

    • Search Google Scholar
    • Export Citation
  • Okogu, Bright E., (2002), “Issues in Global Natural Gas: A Primer and Analysis,Working Paper 02/40 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Organization for Economic Cooperation and Development (OECD), (2000), OECD Guidelines for Multinational Enterprises (Paris).

  • Organization for Economic Cooperation and Development (OECD), (2004), OECD Principles of Corporate Governance (Paris).

  • Otto, James, ed., (1995), The Taxation of Mineral Enterprises (London: Graham & Trotman/Martinus Nijhoff).

  • Petri, Martin, Günther Taube, and Aleh Tsyvinski, (2003), “Energy Sector Quasi-Fiscal Activities in the Countries of the Former Soviet Union,” in Fiscal Policy Formulation and Implementation in Oil-Producing Countries, ed. by J.M. Davis, R. Ossowski, and A. Fedelino (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Sachs, Jeffrey D., and Andrew M. Warner, (2000), “Natural Resource Abundance and Economic Growth,” in Leading Issues in Economic Development, ed. by Gerald M. Meier and James E. Rauch (New York: Oxford University Press, 7th ed.).

    • Search Google Scholar
    • Export Citation
  • Sala-i-Martin, Xavier, and Arvind Subramanian, (2003), “Addressing the Natural Resource Curse: An Illustration from Nigeria,NBER Working PaperNo. 9804 (Cambridge, Massachusettes: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Skancke, Martin, (2003), “Fiscal Policy and Petroleum Fund Management in Norway,” in Fiscal Policy Formulation and Implementation in Oil-Producing Countries, ed. by J.M. Davis, R. Ossowski, and A. Fedelino (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Sunley, Emil, Thomas Baunsgaard, and Dominique Simard, (2003), “Revenue from the Oil and Gas Sector: Issues and Country Experience,” in Fiscal Policy Formulation and Implementation in Oil-Producing Countries, ed. by J.M. Davis, R. Ossowski, and A. Fedelino (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Tanzi, Vito, (2002), “Pitfalls on the Road to Fiscal Decentralization,” in Managing Fiscal Decentralization, ed. by Ehtisham Ahmad and Vito Tanzi (London: Routledge).

    • Search Google Scholar
    • Export Citation
  • Taube, Günther, (2001), “Fiscal Policy and Quasi-Fiscal Activities in the Islamic Republic of Iran,” paper presented at a conference at the Central Bank of Iran, Tehran, May.

    • Search Google Scholar
    • Export Citation
  • Wakeman-Linn, John, Paul Mathieu, and Bert van Selm, (2003), “Oil Funds in Transition Economies: Azerbaijan and Kazakhstan,” in Fiscal Policy Formulation and Implementation in Oil-Producing Countries, ed. by J.M. Davis, R. Ossowski, and A. Fedelino (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation