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 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, 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