Front Matter Page
© 2002 International Monetary Fund
November 2002
IMF Country Report No. 02/250
Republic of Lithuania: Report on the Observance of Standards and Codes—Fiscal Transparency Module
This Report on the Observance of Standards and Codes on Fiscal Transparency for the Republic of Lithuania was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on November 1, 2002. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of the Republic of Lithuania or the Executive Board of the IMF.
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Front Matter Page
INTERNATIONAL MONETARY FUND
REPUBLIC OF LITHUANIA
Report on the Observance of Standards and Codes (ROSC) Fiscal Transparency Module
Prepared by the Fiscal Affairs Department
Approved by John Odling-Smee and Teresa Ter-Minassian
November 1,2002
Executive Summary
This report assesses fiscal transparency practices in Lithuania in relation to the requirements of the IMF Code of Good Practices on Fiscal Transparency based on the authorities’ response to the IMF fiscal transparency questionnaire and other information provided by the authorities.
Lithuania’s fiscal institutional framework meets many requirements of the Code of Good Practices on Fiscal Transparency. Important strengths are clearly-defined roles and responsibilities of the three branches of government; limited scope for quasi-fiscal activity at the central government level; and binding debt rules for all levels of government. Also, reforms that are being implemented promise to ultimately move Lithuania toward best practices in several areas. Still, Lithuania has much room for further improvement in a number of key fiscal transparency areas. In particular, a significant degree of fragmentation in the budget framework and budget processes—with various extrabudgetary funds, programs, and activities, and different concepts for planning, monitoring, and reporting budget activity—increases administrative burdens and adversely affects administrative efficiency. Also, while financial compliance controls over state budget execution are in place, the efficiency of fiscal management and planning systems needs to be enhanced with respect to a large number of budget institutions, and their comprehensiveness should be improved by including extrabudgetary funds, programs, and activities, and the operations of the municipalities.
IMF staff recommendations for enhancing fiscal transparency focus on three areas: enhancing the comprehensiveness of the budget framework; streamlining fiscal management procedures and practices; and strengthening fiscal documentation and analysis. Most immediate among these would be adopting a single, comprehensive budget framework for analytical purposes, fiscal decision making, and fiscal accounting and reporting. In addition, the staff suggests to further reduce quasi-fiscal activities (particularly at the municipal level), including by strengthening financial controls, as well as internal and external audits.
Contents
I. Introduction
II. Description of Practice
A. Clarity of Roles and Responsibilities
B. Public Availability of Information
C. Open Budget Preparation, Execution, and Reporting
D. Assurances of Integrity
III. IMF Staff Commentary
Enhancing the comprehensiveness of the budget
Text Boxes
1. The Reform of Municipal Finances
2. Main Sources of Fiscal Risk
3. The Budget Cycle
Abbreviations, Acronyms, and Specific Terms
| BoL |
Bank of Lithuania |
| CPI |
Consumer Price Index |
| DoS |
Department of Statistics |
| EBF |
Extrabudgetary Fund |
| EBRD |
European Bank for Reconstruction and Development |
| EIB |
European Investment Bank |
| EU |
European Union |
| FPAD |
Financial Planning and Analysis Division of the State Treasury |
| FSSA |
Financial System Stability Assessment |
| GFS86 |
Government Finance Statistics Manual of 1986 |
| GFS01 |
Government Finance Statistics Manual of 2001 |
| HIF |
State Health Insurance Fund |
| IBRD |
World Bank |
| IMF |
International Monetary Fund |
| MoE |
Ministry of Economy |
| MoF |
Ministry of Finance |
| Mol |
Ministry of Interior |
| MoJ |
Ministry of Justice |
| NIB |
Nordic Investment Bank |
| SPF |
State Property Fund |
| PIP |
Public Investment Program |
| QFAs |
Quasi-fiscal activities |
| ROSC |
Report on the Observance of Standards and Codes |
| RSF |
Reserve Stabilization Fund |
| SBA |
Standby Arrangement |
| SCO |
State Control Office (External Audit) |
| SDDS |
Special Data Dissemination System |
| SDMD |
State Debt Management Department of the Ministry of Finance |
| Seimas |
Lithuania’s national parliament |
| SNA |
System of National Accounts |
| SoDra |
State Social Insurance Fund |
| SRA |
Saving Restitution Account |
| TSA |
Treasury Single Account |
Lithuanian Weblinks
| AB Turto Bankas | |
| Association of Municipalities | |
| Bank of Lithuania | |
| Central Securities Depository | |
| Chamber of Auditors | |
| Commission for Prices and Energy | |
| Communications Regulatory Authority | |
| Constitutional Court | |
| Department of Statistics | |
| Deposit Insurance Fund | |
| Development Agency | |
| Export and Import Insurance Company | |
| Government of Lithuania | |
| Investments and Business Guarantees Company | |
| Ministry of Finance | |
| Ministry of Justice | |
| Mortgage Insurance Company | |
| National Stock Exchange | |
| Parliament (Seimas) | |
| President of the Republic | |
| State Audit Office | |
| State Health Insurance Fund | |
| State Procurement Agency | |
| State Property Fund | |
| State Social Insurance Fund | |
| State Tax Inspectorate | |
| Vilnius Municipality |
More links to government web sites are available at www.online.lt/hgo/v.htm. Seimas has a comprehensive legal database available at www3.hs.lt/n/eng/DPaieska.html. The Ministry of Justice provides translations of major laws at www.tm.lt/Litlex/En g/Frames/Laws/Laws.htm; the Ministry of Finance provides some translated laws at www.finmin.lt/engl/istatmen.htm.
Lithuania: Basic Data
Type of government: unitary parliamentary republic
Fiscal year: January-December
Population: 3,475.6 thousand
GDP (2001 preliminary): LTL 47,968 million (US$11,992 million)
Public and publicly guaranteed debt in percent of GDP (2001 preliminary): 29.2