- Sailendra Pattanayak
- Published Date:
- April 2018
THE FISCAL TRANSPARENCY HANDBOOK
© 2018 International Monetary Fund
Joint Bank-Fund Library
Names: International Monetary Fund. | International Monetary Fund. Fiscal Affairs Department.
Title: Fiscal transparency handbook.
Description: Washington, DC : International Monetary Fund,  | “The Handbook has been a vast collaborative undertaking by the Fiscal Affairs Department staff.” | Includes bibliographical references.
Identifiers: ISBN 9781484331859 (paper)
Subjects: LCSH: Fiscal policy—Handbooks, manuals, etc. | Financial disclosure—Handbooks, manuals, etc.
Classification: LCC HJ192.5.F573 2018
ISBN 978-1-48433-185-9 (paper)
Disclaimer: The views expressed in this book are those of the authors and should not be reported as or attributed to the International Monetary Fund, its Executive Board, or the governments of any of its member countries.
Please send orders to:
International Monetary Fund, Publication Services
P.O. Box 92780, Washington, DC 20090, U.S.A.
Tel.: (202) 623–7430 Fax: (202) 623–7201
Fiscal transparency provides legislatures, markets, and citizens with the information they need to hold governments accountable for their fiscal performance and use of public resources. Since the IMF first adopted the Code of Good Practices in Fiscal Transparency in 1998, and introduced voluntary assessments of fiscal transparency practices in our member countries, research has shown the importance of fiscal transparency for the effective management of public finances, improving governance, and reducing corruption. In particular, a lack of fiscal transparency can undermine accountability and provide opportunities for the misappropriation of public funds. The growing distrust between citizens and governments on how public moneys are used, and how to tackle poverty and inequalities, also calls for greater transparency in public accounts.
For 20 years, the IMF has remained at the forefront of the fiscal transparency agenda, adapting the Code as needed. The current, 2014, version of the Code reflects lessons from the global financial crisis; it received much input from a broad-based global consultation process that involved, among others, governments, civil society, academia, and market participants. It was launched together with a new Fiscal Transparency Evaluation (FTE) tool to help assess actual country practices against the Code.
I am now pleased to introduce the 2018 Fiscal Transparency Handbook. The Handbook reflects on our experiences with FTEs, provides detailed guidance on implementing the Code’s principles and practices, and breaks new ground for enhancing countries’ fiscal transparency and accountability. Promoting greater fiscal transparency requires both clear reporting standards, as well as effective monitoring and enforcement of those standards. The Handbook offers examples and case studies from countries around the globe on how to achieve this. As a companion to the Code and the FTEs, the Handbook will help countries strengthen their economic institutions in the area of public financial management. Together they form an important part of IMF surveillance tools and efforts to encourage countries to improve fiscal governance, including accountability of governments for their delivery on policies related to reduction of poverty and gender inequality.
I recommend this Handbook to all those—officials, researchers, representatives of civil society organizations, and others—in the public or private sectors, who have an interest in promoting transparency and effective management of public finances. Together, we can push the transparency agenda and close the trust gap between citizens and their governments.
International Monetary Fund
The 2014 Fiscal Transparency Code and its companion, the Fiscal Transparency Handbook, mark important milestones in the IMF’s efforts to promote transparency and accountability in the use of public resources and support governments’ efforts to strengthen economic governance, policymaking, and economic institution building. The Code, which is one of the 12 standards under the IMF’s Standards and Codes Initiative that was launched in the late 1990s to strengthen the international financial architecture, has evolved into being the most widely recognized international standard for disclosure of information about public finances. The Fiscal Transparency Evaluation (FTE) is the IMF’s main diagnostic tool for a comprehensive assessment of country practices against the transparency standards set by the Code.
This Handbook explains the 2014 Code’s principles and practices and provides more detailed guidance on their implementation, including through country examples that derive from the FTEs. It covers the first three Pillars of the Code (i.e., fiscal reporting, fiscal forecasting and budgeting, and fiscal risk analysis and management); discusses key dimensions and principles under each pillar; provides guidance on the requirements for meeting the basic, good, and advanced practices for each principle; and includes practical examples from countries around the globe. The Handbook also notes relevant international standards and guidance material related to the Code’s principles. A subsequent version of the Handbook, planned for 2019, will incorporate the fourth Pillar of the Code on natural resource revenue management, which is currently being finalized.
The Handbook also aims to provide guidance on the application of the 2014 Code to a range of stakeholders: governments with an interest in promoting fiscal transparency; national oversight and accountability institutions, such as legislatures, supreme audit institutions, parliamentary budget offices, national statistics agencies, and independent fiscal agencies; representatives of civil society organizations; international organizations; investors; academia and researchers studying public finance and fiscal transparency; and others with an interest in further improving fiscal transparency practices around the globe.
The Handbook has been a vast collaborative undertaking by the Fiscal Affairs Department staff and in close cooperation with external stakeholders. We are grateful, in particular, to the governments who have undertaken fiscal transparency evaluations, IMF Executive Directors’ offices, and colleagues from other departments of the IMF who provided helpful comments on the draft. The Handbook also benefited from comments and suggestions from World Bank staff, the Global Initiative on Fiscal Transparency (GIFT), the International Budget Partnership (IBP), and the Public Expenditure and Financial Accountability (PEFA) secretariat.
Fiscal Affairs Department
The Fiscal Transparency Handbook was produced by the Fiscal Affairs Department (FAD) staff under the supervision of Manal Fouad and Carolina Renteria (both Division Chiefs, Public Financial Management II and I divisions, respectively) and before them, by Marco Cangiano and Richard Hughes, and under the strategic guidance of Gerd Schwartz and Paolo Mauro (both Deputy Directors in FAD).
The drafting team was led by Sailendra Pattanayak (Deputy Division Chief of Public Financial Management Division II) and comprising the following current and former staff: Miguel Alves, Sophie Brown, Sagé de Clerck, Laura Doherty, Majdeline El Rayess, Lesley Fisher, David Gentry, Fabien Gonguet, Jason Harris, Tim Irwin, Delphine Moretti, Brian Olden, Eliko Pedastsaar, Xavier Rame, Sandeep Saxena, Amanda Sayegh, Johann Seiwald, and Ashni Singh. Inputs were received from Virginia Alonso, Racheeda Boukezia, Jacques Charaoui, Teresa Curristine, Avril Halstead, Guohua Huang, Yasemin Hurcan, Bruno Imbert, Fazeer Rahim, Gwenaelle Suc, Gerardo Una, Concha Verdugo, as well as Murray Petrie (FAD Expert). Richard Allen (FAD Visiting Scholar) and Torben Hansen (Deputy Division Chief of Public Financial Management Division I) reviewed the final manuscript and provided suggestions to improve the draft.
Nour Chamseddine and Rohini Roy provided excellent research assistance. The editorial team consisted of Gemma Diaz from the Communications Department, Jenny DiBiase (FAD editing consultant), Sasha Pitrof, and Thibault Vermeulen.
Abbreviations and Acronyms
Bank for International Settlements
Central African Economic and Monetary Community
Chart of accounts
Fiscal Transparency Code
Classification of the Functions of Government
Country Procurement Assessment Report
Data Quality Assessment Framework
Debt sustainability analysis
East African Community
Eastern Caribbean Currency Union
Extractive Industries Transparency Initiative
European System of Accounts
Fiscal Analysis of Resource Industries
Financial management information system
Financial risk statement
Fiscal Responsibility and Transparency Framework
Fiscal Responsibility and Transparency Law
Financial Sector Assessment Program
Fiscal Transparency Evaluation
Generally Accepted Accounting Principles
General Data Dissemination System
Gross domestic product
Government Finance Statistics
Government Finance Statistics Manual
Global Initiative for Fiscal Transparency
International Accounting Standards Board
International Budget Partnership
International Federation of Accountants
International Financial Reporting Standards
Institute of Internal Auditors
International Monetary Fund
International Organization of Supreme Audit Institutions
International Public Sector Accounting Standards
International Public Sector Accounting Standards Board
International Standards of Supreme Audit Institutions
Korea On-Line E-Procurement System
Medium-Term Budget Framework
Medium-Term Debt Management Strategy
Office of Budget Responsibility
Open Budget Survey
Organisation for Economic Co-operation and Development
Parliamentary Budget Office
Public Expenditure and Financial Accountability
Public financial management
Public-Private Partnerships Fiscal Risk Assessment Model
Preliminary feasibility study
Public Investment Management Assessment
Public investment plan
Public Sector Debt Statistics: Guide for Compilers and Users
Revenue Administration Fiscal Information Tool
Revenue Administration Gap Analysis Program
Report on the Observance of Standards and Codes
Supreme audit institution
Special Data Dissemination Standard
Special Drawing Right
System of National Accounts
Tax Administration Diagnostic Assessment Tool
Treasury Single Account
West African Economic and Monetary Union
The Fiscal Transparency Code
Pillar II. Fiscal Forecasting and Budgeting Budgets and their underlying fiscal forecasts should provide a clear statement of the government’s budgetary objectives and policy intentions, and comprehensive, timely, and credible projections of the evolution of the public finances.
Principle 2.1.3. Medium-Term Budget Framework: Budget documentation includes outturns and projections of revenues, expenditures, and financing over the medium term on the same basis as the annual budget.
Principle 2.1.4. Investment Projects: The government regularly discloses its financial obligations under multi-annual investment projects, and subjects all major projects to cost-benefit analysis and open and competitive tender.
Dimension 2.2. Orderliness: The powers and responsibilities of the executive and legislative branches of government in the budget process should be defined in law, and the budget should be presented, debated, and approved in a timely manner.
Principle 2.2.1. Fiscal Legislation: The legal framework clearly defines the timetable for budget preparation and approval, key contents of the budget documentation, and the powers and responsibilities of the executive and legislature in the budget process.
Principle 2.4.3. Forecast Reconciliation: Budget documentation and any subsequent updates explain any material changes to the government’s previous fiscal forecasts, distinguishing the fiscal impact of new policy measures from the baseline.
Pillar III. Fiscal Risk Analysis and Management Governments should disclose, analyze, and manage risks to the public finances and ensure effective coordination of fiscal decision making across the public sector.
Principle 3.3.1. Subnational Governments: Comprehensive information on the financial condition and performance of subnational governments, individually and as a consolidated sector, are collected and published.
Principle 3.3.2. Public Corporations: The government regularly publishes comprehensive information on the financial performance of public corporations, including any quasi-fiscal activity undertaken by them.