A vehicle for improving government efficiency and governance

MAIN THEMES

IMF Code of Good Practices—

summary and rationale

Implementation plans and challenges

Experience so far

IMF Standards and Codes

http://www.imf.org/external/

Standards & Codes

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

• There should be independent assurance of integrity of information

The Code is based on four general principles:

The Code’s Vertical Structure

The Code is organized in a hierarchy of principles and practices, which progressively define good practice in fiscal transparency:

• Four general principles• Specific principles• Good practices

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

Fiscal transparency thus provides..

• A powerful force to link government policies to market forces; and

• Available evidence indicates that– fiscal transparency promotes sound

fiscal policies; and

– lack of transparency contributes to poor economic performance

Limits to Fiscal Transparency

• Should not interfere with due decision-making process

• Due care in providing market sensitive information

• Limits must be set on basis of cost effectiveness

Transparency and Governance

• Transparency is necessary for government accountability and helps to limit public sector corruption.

• It should be an important element in improving governance alongside other reforms:– Civil service reform– Regulatory reform– Anti-corruption programs

Implementation of the Code

• Voluntary implementation• Diversity across countries

• Technical assistance

• Cooperation among international agencies

Voluntary Implementation

• The Manual and questionnaire—available from the web site—are designed to facilitate self-assessment by countries

• Technical help will be available from FAD to assist in completing the questionnaire

• 11 countries have completed experimental reports on fiscal transparency standards; more are underway

Diversity

Many member countries will not be able to meet all of the requirements of good practice….

• Manual proposes minimum standard requirements

• Technical assistance will be provided (by IMF and other agencies) to help meet Code requirements in developing and transition economies

Technical Assistance &Cooperation

• Self-assessment against the Code provides a benchmark for TA needs and ex post evaluation

• Traditional TA will emphasize fiscal transparency impact

• Surveillance and technical consultations will identify specific country needs

• Need close cooperation on assessment and follow-up

• ROSC being established as main vehicle to promote transparency in Fund surveillance activities

• 11 fiscal ROSCs completed and on the website, another 7 near completion, 15-20 proposed for FY 2000/1

• Follow-up being established as a routine surveillance activity

• Resource costs to the Fund (and countries) becoming substantial

• Coordination with other agencies still limited

Experience so far

• Routine consultation on ROSC preparation• ROSCs to provide a basis for TA coordination

and a benchmark for progress• Regional coordination to be encouraged• IFIs routinely advocate some specific standards

(e.g., disclosure of contingent liabilities)• Supreme Audit Institutions (national

audit/controller offices) encouraged to play a central role as transparency watchdogs

Institutionalization: some thoughts