Fiscal Transparency, ROSCs and Budget Execution

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Fiscal Transparency, ROSCs and Budget Execution
World Bank Seminar Washington DC April 9, 2003
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TOPICS

• Rationale for transparency
• ROSC process
• Key findings
• Linkages with GFS and accounting standards

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Structure of the Code
The Code is based on four general principles

• 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

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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
  marketswhich will provide further incentives for
  sound fiscal policies

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Promotion depends on many groups...

• IFIs and bilateral support of government
• Financial analysts concern with transparency
• Civil society concern with public
  information and participation

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Build a dynamic partnership...
IMF/MDBs
Government
Civil Society
Financial Analysts
Public
Investors
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IMF Objectives and tools

• Promote principles and good practice --Code
  and Manual
• Integrate with Fund surveillance --ROSCs
• Build incentives improve practices --techni
  cal assistance outreach
• Reports on Observance of Standards and Codes

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ROSC procedures

• Questionnaire and self-assessment
• Staff review and assessment
• Country review
• Publication
• Article IV and ROSCs

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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

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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.

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

• 54 countries have completed fiscal ROSCs
• 48 are published on the IMF website
• Some focus on emerging market
  countriesbut a wide range covered

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ROSC Program
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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/2003/03
  0503.htm International Standards Strengthening
  Surveillance, Domestic Institutions, and
• International Markets (SM/O3/86) Supplement 2

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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 pace

Transparency code emphasizes disclosure of data
relevant to macrofiscal policy accounting
emphasizes point of recognition of assets and
liabilities.
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GFSM 2001

• Synchronized with national accounts 1993 SNA
• Integrates flows and stocksa balance sheet
  approach
• Cash plus reportinginitially cash, but
  progressive move to accrual basis reporting
• Will link with international accounting
  standards