Fiscal transparency – the comprehensiveness, clarity, reliability, and timeliness of public reporting on the state of public finances – is critical for effective fiscal management and accountability. It helps ensure that governments have an accurate picture of their finances when making economic decisions, including of the costs and benefits of policy changes and potential risks to public finances. It also provides legislatures, markets, and citizens with the information they need to hold governments accountable. Greater fiscal transparency can also help strengthen the credibility of a country’s fiscal plans and can help underpin market confidence and market perceptions of fiscal solvency.
Fiscal transparency helps governments provide a comprehensive picture of fiscal positions and prospects, including potential fiscal risks. By highlighting risks to fiscal positions and the fiscal outlook, it supports a timely and smooth response to changing economic conditions, reducing the incidence and severity of crises and promoting financial and economic stability.
The IMF’s Fiscal Transparency Code is the international standard for disclosing information about public finances. It guides and informs transparency practices in IMF member countries and is the basis for Fiscal Transparency Evaluations (FTEs), which support member countries in strengthening fiscal surveillance, accountability, and management.
The Fiscal Transparency Code takes account of different levels of country capacity by differentiating between basic, good, and advanced practices for four fiscal transparency pillars:
1. Fiscal reporting should offer relevant, comprehensive, timely, and reliable information on the government’s financial position and performance.
2. Fiscal forecasting and budgeting should provide a clear statement of the government’s budgetary objectives and policy intentions, together with comprehensive, timely, credible projections of public finances.
3. Fiscal risk analysis and management should ensure that risks to public finances are disclosed, analyzed, and managed, and that fiscal decision-making across the public sector is effectively coordinated.
4. Resource revenue management should provide a transparent framework for the ownership, contracting, taxation, and utilization of natural resources.
Volume 1 of the IMF’s Fiscal Transparency Handbook covers the first three pillars. It provides practical guidance on implementation along with examples of practices around the world. Volume 2, covering natural resources, will be issued.
Fiscal Transparency Evaluations (FTEs) are the IMF’s principal fiscal transparency diagnostic tool. These are voluntary exercises conducted upon request by an IMF member country.
FTEs provide countries with a comprehensive assessment of fiscal transparency practices against the standards set by the Fiscal Transparency Code. Assessments may cover all four pillars or individual ones, allowing countries to tailor their FTEs to areas of specific interest. Countries that undertake these exercises receive analysis on the scale and sources of fiscal vulnerability, a summary of fiscal transparency strengths, and proposals to address any fiscal transparency shortcomings.
FTEs have been conducted in over 38 countries to date, across a wide range of regions and income levels and additional FTEs are planned.
This page was last updated in February 2023
