Figure 3: Fiscal Transparency Indicators

Figure 4: Brazil Fiscal Transparency Summary Heat Map

Georgia: Coverage of Public Sector Activity in Fiscal Reports(Percent of expenditure by level of government)

LEVEL OF PRACTICE
1. Fiscal
Reporting

2. Fiscal Forecasting
and Budgeting

3. Fiscal Risk Analysis
and Management

1.1.1. Coverage ofInstitutions

2.1.2. Macroeconomic
Forecasts

3.1.1. Macroeconomic
Risks

1.1.2. Coverage ofStocks

2.1.3. MT Budget
Framework

3.1.3. Long-Term Fiscal
Sustainability

1.1.3. Coverage of Flows

2.1.4. Investment
Projects

3.2.2. Asset-andLiability
Management

2.4.1. IndependentEvaluation

3.2.5. Financial Sector

ReportedHigh Importance

Not Reported

CentralGovernment

Public Sector

Medium-Term Expenditure Forecast Errors in Select Countries (Percent of GDP)
5

BudgetOne-year ahead
Two-years ahead

43

Medium Importance

GeneralGovernment

Underestimate

21-1

TurkeyIreland

Greece

Kenya

Spain

UgandaFinland

Austria

Portugal

FranceGermanyUK

RomaniaSouth Africa

Overestimate-2

Size of Contingent Liabilities in Select Countries (Percent of GDP)

Lo w Importance

01.4.1. StatisticalIntegrity

2.2.1. Fiscal Legislation 3.1.2. Specific Fiscal
Risks

1.4.3. Comparabilityof Fiscal Data

2.3.1. Fiscal Policy
Objectives

3.2.6. NaturalResources

2.4.2. Forecast
Reconciliation

3.3.1. Subnational
Governments
3.3.2. Public
Corporations

1.1.4. Coverage of Tax
Expenditures

2.1.1. Budget Unity

3.2.1. Budgetary
Contingencies

1.2.1. Frequency of
In-Year Reporting

2.2.2. Timelinessof BudgetDocuments

3.2.3. Guarantees

1.2.2. Timeliness ofAnnual Financial
Statements

2.3.2. Performance
Information

3.2.4. Public-Private
Partnerships

1.3.1. Classification

2.3.3. Public
Participation

3.2.7. Environmental
Risks

1.3.2. Internal
Consistency

2.4.2. Supplementary
Budget1.3.3. Historical
Revisions300

1.4.2. External Audit

Public Corporation Liability
Explicit Contingent Liability

200

LEGEND LEVEL OF PRACTICE

Not Met100

BasicGood

Advanced

1800382_Redesign_of_FTE_Manual_REVISED7.indd 1

Tanzania

Kenya

Mozambique

Georgia

Peru

Philippines

Finland

Austria

UK

TurkeyBrazilAlbania

Tunisia

RussiaRomania

IrelandFor further information, or if you have any questions, visit:
http://imf.org/fiscaltransparency or contact: fiscaltransparency@imf.org

Portugal0

CODE ANDEVALUATIONINTERNATIONAL MONETARY FUND
700 19th STREET, NW
WASHINGTON, DC 20431
USA

FISCAL AFFAIRSDEPARTMENT

4/16/18 11:26 AM

WHY IS FISCALFISCAL TRANSPARENCY CODE

The IMF’s Fiscal Transparency Code (the Code) is the international
standard for disclosure of information about public finances.
The current, 2014, version of the Code comprises a set of principles
built around four pillars (Fig 2): (i) fiscal reporting; (ii) fiscal forecasting
and budgeting; (iii) fiscal risk analysis and management; and(iv) resource revenue management.

TRANSPARENCYIMPORTANT?

Basic, good, and advanced practices are identified against eachprinciple to provide countries with clear milestones toward fullcompliance with the Code. Pillars I-III have been issued while a draftof Pillar IV, which covers specific principles and practices applicable toresource-rich countries, has undergone public consultation and piloting.

Fiscal transparency is essential to effective fiscal management andaccountability. It also fosters good governance and helps reduce
corruption. It ensures:

Figure 2: The Four Pillars of the Fiscal Transparency Code• Governments have an accurate picture of their fiscal positionand prospects and the costs and benefits of any policy changes
to support a better-informed debate about the design and resultsof fiscal policy;

I. Fiscal
Reporting

II. Fiscal
Forecasting& Budgeting

public finances, and can better manage these, allowing for earlier
and smoother fiscal policy adjustments where required; and1.1 Coverage

2.1 Comprehensiveness• Legislatures, citizens, and markets have the information they need

1.2 Frequency
andTimeliness• Policymakers have a sound understanding of the potential risks toto hold governments accountable.

Greater fiscal transparency can also help strengthen the credibilityof a country’s fiscal plans and can help underpin market confidence
and market perceptions of fiscal solvency (Fig 1). The loss of market
confidence in governments with underestimated or hidden deficits
in the wake of the global financial crisis underscored the importanceof fiscal transparency to global financial and economic stability.

1.3 Quality

1.4 Integrity

2.3 Policy
Orientation

2.4 Credibility

Middle Income

Linear (High Income)Linear (Middle Income)FISCAL
TRANSPARENCYHANDBOOK

Average CDS Spreads, 2008-11

4003002001000123
IMF Index of Fiscal Transparency

45The 2018 Fiscal Transparency
Handbook provides practicalguidance on the implementationof the Code. It explains eachprinciple under Pillars I-III of theCode and its importance; specifies
the requirements for meetingthe basic, good and advanced
practices for each principle; andprovides examples of practices
from countries around the globe.
It also notes relevant international
standards and guidance material,related to the Code’s principles.

IV. ResourceRevenue
Management
4.1 Legal & FiscalRegime

3.1 Risk Analysis& Disclosure

2.2 Orderliness

Figure 1: Fiscal Transparency & Market Perceptions of Solvency

High Income

III. Fiscal Risk
Analysis& Management

3.2 RiskManagement

3.3 Fiscal
Coordination

4.2 Allocationof Rights &Collection ofRevenue
4.3 Company
Reporting
4.4 Resource
RevenueManagement

FISCAL TRANSPARENCY EVALUATION

Fiscal Transparency Evaluations (FTEs) are the IMF’s principal
fiscal transparency diagnostic tool. FTEs provide countries with:• a comprehensive assessment of their fiscal transparency practices

against the standards set by the Code;• rigorous analysis of the scale and sources of fiscal vulnerability

based on a set of fiscal transparency indicators (Fig 3);• a visual account of their fiscal transparency strengths and reform

priorities through summary heat maps (Fig 4); and• targeted recommendations to improve fiscal transparency practices andthe option of a sequenced action plan to help countries implement them.

FTEs have been conducted across a wide range of regions and income
levels. The results show there is scope for countries to improve theirtransparency practices in particular by expanding the coverage offiscal reports, strengthening the credibility of budget frameworks,
and improving the disclosure and management of fiscal risks (Fig 5).
Figure 5: Fiscal Transparency Evaluation Results by Pillar
100Not met

GoodAdvanced

75
50
250

Fiscal Reporting

Fiscal Forecasting Fiscal Risk Analysis
and Budgetingand Management

Overall

According to a survey, countries that have undertaken FTEs havefound them useful in providing an assessment of current fiscal
transparency practices and setting clear milestones for improving
them, through a set of well-prioritized recommendations that are
tailored to country circumstances. (Fig 6).
Figure 6: Authorities’ Views on Fiscal Transparency Evaluations
Captures all key elements
of ﬁscal transparency
Provides a fair assessmentof strengths and weaknesses
Offers well-prioritized policy
and institutional reforms
Sets clear milestones
for building capacity
Identiﬁes information not previously
available to policy makers
0To some extent

1800382_Redesign_of_FTE_Manual_REVISED7.indd 2

Basic25

To a large extent

5075100To a great extent

4/16/18 11:26 AM