Fiscal Transparency, ROSCs and Budget Execution

Fiscal Transparency, ROSCs and Budget Execution

World Bank SeminarWashington DCApril 9, 2003

TOPICS

Rationale for transparency

ROSC process

Key findings

Linkages with GFS and

accounting standards

Structure of the Code

• Roles and responsibilities of and within government should be clear

• Comprehensive reliable information on fiscal activities should be available to the public

• The processes of budget preparation, execution, and reporting should be open

• Integrity of information should be assured

The Code is based on four general principles:

Why Transparency?

Improved transparency is seen as a necessary basis for improving efficiency and effectiveness of fiscal management:

• Better information will make government more accountable and lead to better fiscal policies

• Transparency will be reinforced by financial markets—which will provide further incentives for sound fiscal policies

Promotion depends on many

groups... IFIs and bilateral support of

government

Financial analysts concern with

transparency

Civil society concern with public

information and participation

Government

Public Investors

IMF/MDBs

CivilSociety

FinancialAnalysts

Build a dynamic partnership...

IMF Objectives and tools

Promote principles and good

practice --Code and Manual

Integrate with Fund surveillance

--ROSCs*

Build incentives & improve

practices --technical assistance

& outreach

* Reports on Observance of Standards and Codes

ROSC procedures

Questionnaire and self-

assessment

Staff review and assessment

Country review

Publication

Article IV and ROSCs

ROSCs play a central role

Dialogue with member countries on importance of transparency Links with Fund programs and TA from Fund and others Publication signals a commitment to improve transparency

But need to coordinate....

Many agencies assess standards or related aspects Duplication, inefficiency, high country costs, information overload Clarity of agency objectives Sustained, focused efforts.

54 countries have completed fiscal ROSCs

48 are published on the IMF website

Some focus on emerging market countries—but a wide range covered

http://www.imf.org/external/ IMF at Work/Reports on the Observance of Standards and Codes (ROSCs)

ROSC Program

Chart 1. ROSC Progress

3

9

1412

30

19

0

10

20

30

40

50

60

70

80

Fiscal Years

Nu

mb

er o

f C

oun

trie

s

Experimental 2nd Round

2001 2002

(12)

(26)

(38)

(68)

Completed Forecast

( ) CumulativeNumber completed

+

+

+

+

+

Planned

Currently Proposed

1999 2000 2003 2004

+(54)

Key findings to date….

Most ROSC participants are taking some steps to improve transparency

Around 60 percent of market access countries are participating

A range of common problems identified

Poor fiscal data quality Off-budget activity Tax expenditures and discretionary tax

administration Poor definition of intergovernmental relations

See http://www.imf.org/external/np/pdr/sac/2003/030503.htm International Standards: Strengthening Surveillance, Domestic Institutions, and

International Markets (SM/O3/86) Supplement 2;

Addressing poor data quality... Establish standard fiscal reporting

(GFS) Getting basic reconciliation right Move to accrual basis reporting (GFSM

2001) Adoption of international accounting standards (IPSAS) at an appropriate paceTransparency code emphasizes disclosure of data relevant to macrofiscal policy; accounting emphasizes point of recognition of assets and liabilities.

GFSM 2001

Synchronized with national accounts—

1993 SNA Integrates flows and stocks—a balance

sheet approach Cash plus reporting—initially cash, but

progressive move to accrual basis reporting Will link with international accounting standards