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[Federal Register Volume 80, Number 13 (Wednesday, January 21, 2015)]
[Notices]
[Pages 2997-3004]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-00792]

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DEPARTMENT OF STATE

[Public Notice 9006]

2014 Fiscal Transparency Report

AGENCY: Department of State.

ACTION: Notice.

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SUMMARY: The Department of State hereby presents the findings from the 
FY 2014 fiscal transparency review process in its Fiscal Transparency 
Report. This report describes the minimum requirements of fiscal 
transparency developed by the Department of State in consultation with 
other relevant federal agencies, identifies governments that are 
potential beneficiaries of FY 2014 foreign assistance funds, assesses 
those that did not meet the minimum fiscal transparency requirements, 
and indicates whether those governments made significant progress 
towards meeting the requirements.

Fiscal Transparency

    Fiscal transparency is a critical element of effective public 
financial management, helps in building market confidence, and sets the 
stage for economic sustainability. Transparency also provides a window 
into government budgets for citizens of any country, helping them to 
hold their leadership accountable. The Department of State's fiscal 
transparency review process assesses whether governments meet minimum 
requirements of fiscal transparency. The review includes an assessment 
of the transparency of processes for administering government contracts 
and licenses for natural resource extraction.
    Annual reviews of the fiscal transparency of governments that 
receive U.S. assistance help ensure U.S. taxpayer money is used 
appropriately and to sustain a dialogue with governments to improve 
their fiscal performance, leading to greater macroeconomic stability 
and better development outcomes.
    Section 7031(b) of the Department of State, Foreign Operations, and 
Related Programs Appropriations Act, 2014 (Div. K, Pub. L. 113-76) 
(``the Act'') requires the Secretary to develop, for each government 
receiving assistance appropriated by the Act, minimum requirements of 
fiscal transparency, in consultation with heads of other relevant 
federal agencies, and to make a determination of ``significant'' or 
``no significant progress'' in meeting the minimum requirements of 
fiscal transparency for each government that did not meet the minimum 
requirements. Through authority delegated from the Secretary, the 
Deputy Secretary of State for Management and Resources made those 
determinations for FY 2014.
    This report describes the minimum requirements of fiscal 
transparency developed by the Department, identifies whether 
governments met the requirements, and indicates whether those 
governments that did not meet the minimum requirements made significant 
progress toward meeting them. The report includes a description as to 
how those governments fell short of the minimum requirements, outlines 
any significant progress being made toward meeting the minimum 
requirements, and provides specific recommendations of short and long-
term steps such governments should take to improve fiscal transparency. 
The report also outlines the process followed by the Department in 
completing the assessments and describes how funds appropriated by the 
FY 2014 and earlier appropriations acts are being used to support 
fiscal transparency.

Fiscal Transparency Review Process and Criteria

    The Department reviewed its minimum requirements of fiscal 
transparency in consultation with other relevant federal agencies, and 
updated and strengthened its review criteria. In determining which 
governments were subject to fiscal transparency assessments and 
inclusion in the report, the Department identified those governments it 
anticipated would receive bilateral allocations of assistance 
appropriated by the Act based upon a review of the Congressional Budget 
Justification for FY 2014, and in consultation with the Department's 
Office of U.S. Foreign Assistance Resources, as well as the 
Department's regional and functional bureaus.\1\
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    \1\ This included governments that received government-to-
government assistance and or assistance to be provided through 
implementing partners. Additional governments may receive assistance 
through regional or global programs, but the governments identified 
in the report represent the vast majority of foreign assistance 
recipients.
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    The Department then assessed the fiscal transparency of the 140 
governments identified as potential recipients of bilateral allocations 
of assistance from FY 2014 foreign assistance funds, determined whether 
the minimum requirements were met, and identified any measures those 
governments had implemented to make significant progress towards 
meeting the requirements.
    In conducting the FY 2014 review, the Department assessed the 
fiscal transparency of governments as of January 17, 2014, the date the 
Act, which mandated this review, became law. In reaching a 
determination, the Department considered information from U.S. 
embassies and consulates, other U.S. government agencies, international 
organizations such as the IMF and multilateral development banks, and 
civil society organizations. U.S. diplomatic missions consulted with 
foreign government officials, NGOs, international organizations, and 
civil society to obtain information for these assessments.

Minimum Requirements of Fiscal Transparency

    Subsection 7031(b)(2) of the Act provides that the minimum 
requirements of fiscal transparency developed by the Department are

[[Page 2998]]

requirements ``consistent with those in subsection [7031](a)(1)'' and 
the public disclosure of:
     National budget documentation (to include receipts and 
expenditures by ministry), and
     government contracts and licenses for natural resource 
extraction (to include bidding and concession allocation practices).
    The FY 2014 fiscal transparency review process evaluated whether 
governments receiving U.S. foreign assistance publicly disclosed budget 
documents including receipts and expenditures by ministry. The review 
process also evaluated whether the government has an independent 
supreme audit institution or similar institution that carries out a 
yearly verification of financial statements to ensure they meet 
internationally accepted accounting principles. The review further 
assessed the existence and public disclosure of criteria and procedures 
for awarding government contracts and licenses for natural resource 
extraction, including bidding and concession allocation practices. The 
Department applied the following criteria in assessing whether 
governments met the minimum requirements of fiscal transparency.
    Budget information should be:
     Substantially Complete: Budget documents should provide a 
substantially full picture of a government's revenue streams, including 
natural resource revenues, and planned expenditures. Budget documents 
should include allocations to and earnings from significant state-owned 
enterprises. A published budget that does not include significant cash 
or non-cash resources, including foreign aid or the balances of special 
accounts or off-budget accounts, would not be considered substantially 
complete. Budget documents should also include expenditures to support 
royal families or offices where such expenditures represent a 
significant budgetary outlay. The review process recognizes that 
military and/or intelligence budgets are often not publicly available 
for national security reasons.
     Reliable: Budget documents and related data are considered 
reliable if they are accurate and disseminated on time. Actual receipts 
and expenditures should be reasonably correlated to the budget plan, 
and significant departures from planned receipts and expenditures 
should be explained in supplementary budget documents and publicly 
disclosed in a timely manner. Financial statements should meet 
internationally accepted accounting principles. The executed budget 
should be audited on a regular and timely basis by an independent 
supreme audit institution, and the results of such audits should be 
made public.
     Publicly Available: Budget documents should be broadly 
available online, at government offices or libraries, on request from 
the ministry, or for purchase at a nominal fee at a government office. 
Publicly available budgets should include receipts and expenditures 
broken down by ministry. Information on government debt obligations 
should be publicly available.
    Natural resource extraction contracting and licensing procedures 
should be:
     Transparent: The criteria and procedures for the 
contracting and licensing of natural resource exploitation should be 
publicly available and codified in law or regulation. Procedures used 
to award contracts and licenses in practice should be consistent with 
the country's legal requirements. The basic parameters of concessions 
and contracts should be made publicly available after the decision. 
Such information should include the geographic area covered by the 
contract or license, the resource being developed, the duration of the 
contract, and the company to which the contract or license is awarded.
    The Department recognizes the specific circumstances and practices 
of fiscal transparency differ among governments. The review process 
takes a tailored approach in evaluating governments while ensuring 
minimum fiscal transparency requirements are met in order to enable 
meaningful participation of the public in the budgeting process.

Fiscal Transparency Innovation Fund

    Section 7031(b)(4) of the Act recommended that not less than $10 
million appropriated under title III of the Act be made available for 
programs and activities to improve budget transparency and to support 
civil society organizations that promote fiscal transparency. With this 
recommendation in mind, the Department and USAID have created the 
Fiscal Transparency Innovation Fund (FTIF). FTIF supports programs and 
activities that assist countries improve their public financial 
management and fiscal transparency standards, and NGOs that promote 
budget transparency. The Bureau of Economic and Business Affairs and 
USAID's Bureau for Economic Growth, Education, and the Environment (E3) 
solicit and award funds in accordance with established guidelines. FY 
2014 funding to be used for FTIF was notified in November, but has not 
been obligated or expended.
    The Department utilized $5 million in FY 2013 authorized funds to 
support 11 projects in the following countries: Chad, Democratic 
Republic of the Congo, Gabon, Guinea, Haiti, Malawi, Nicaragua, Niger, 
and Somalia, as well as one regional project in North Africa and one 
global project to benchmark public procurement systems. The projects 
furthered efforts by government and civil society to improve the state 
of fiscal transparency and public financial management practices, and 
improve public awareness and involvement in the expenditure of public 
resources. Examples of projects included $542,000 to the Department of 
Treasury's Office of Technical Assistance to support improved budgetary 
practices in Gabon and $200,000 to the Institute of Strategic Studies 
and Public Policy in Nicaragua to support civil society participation 
in the budget process.
    The Department intends to use FY 2014 FTIF funds to support 
projects to enhance: (1) Governments' capacity to develop and execute 
comprehensive, reliable, and transparent budgets; (2) citizens' 
visibility into state expenditure and revenue programs; and (3) 
citizens' ability to advocate for specific issues related to government 
budgets and budget processes.

Conclusions of Review Process

    The Department concluded that, of the 140 governments that were 
potential beneficiaries of foreign assistance and were evaluated 
pursuant to the Act, 50 did not meet the minimum requirements of fiscal 
transparency. Of these, eleven governments made significant progress 
toward meeting the minimum requirements of fiscal transparency.
    The Department assessed the following governments as meeting the 
minimum requirements of fiscal transparency for FY 2014: Albania, 
Angola, Armenia, Argentina, The Bahamas, Belize, Benin, Bosnia and 
Herzegovina, Botswana, Brazil, Bulgaria, Cabo Verde, Chile, Colombia, 
Costa Rica, Cote d'Ivoire, Croatia, Czech Republic, Djibouti, Ecuador, 
El Salvador, Estonia, Georgia, Ghana, Greece, Guatemala, Guyana, 
Honduras, Hungary, India, Indonesia, Iraq, Israel, Jamaica, Jordan, 
Kenya, Kosovo, Kyrgyzstan, Latvia, Lesotho, Liberia, Lithuania, 
Macedonia, Malaysia, Mali, Malta, Marshall Islands, Mauritania, 
Mauritius, Mexico, Micronesia, Moldova, Mongolia, Montenegro, Morocco, 
Mozambique, Namibia, Nepal, Pakistan, Palestinian Authority, Panama, 
Papua New Guinea, Paraguay,

[[Page 2999]]

Peru, Philippines, Poland, Portugal, Romania, Rwanda, Samoa, Senegal, 
Serbia, Seychelles, Sierra Leone, Singapore, Slovakia, Slovenia, South 
Africa, Sri Lanka, Thailand, Timor-Leste, Togo, Tonga, Trinidad and 
Tobago, Tunisia, Turkey, Uganda, Uruguay, Vietnam, and Zambia.
    The following table lists those governments that were found not to 
meet the minimum requirements of fiscal transparency and identifies 
whether the governments made significant progress toward meeting those 
requirements:

------------------------------------------------------------------------
Governments assessed pursuant to
 the act as not meeting minimum       Significant       No significant
     requirements of fiscal            progress            progress
    transparency for FY 2014
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Afghanistan.....................  ..................                  X
Algeria.........................  ..................                  X
Azerbaijan......................  ..................                  X
Bahrain.........................  ..................                  X
Bangladesh......................  ..................                  X
Burkina Faso....................  ..................                  X
Burma...........................                  X   ..................
Burundi.........................  ..................                  X
Cambodia........................                  X   ..................
Cameroon........................                  X   ..................
Central African Republic........  ..................                  X
Chad............................                  X   ..................
China...........................  ..................                  X
Comoros.........................                  X   ..................
Congo, Democratic Republic of                     X   ..................
 the............................
Congo, Republic of the..........  ..................                  X
Dominican Republic..............  ..................                  X
Egypt...........................  ..................                  X
Ethiopia........................                  X   ..................
Fiji............................  ..................                  X
Gabon...........................  ..................                  X
Gambia, The.....................  ..................                  X
Guinea..........................                  X   ..................
Guinea-Bissau...................  ..................                  X
Haiti...........................  ..................                  X
Kazakhstan......................  ..................                  X
Laos............................                  X   ..................
Lebanon.........................  ..................                  X
Libya...........................  ..................                  X
Madagascar......................  ..................                  X
Malawi..........................  ..................                  X
Maldives........................  ..................                  X
Nicaragua.......................  ..................                  X
Niger...........................                  X   ..................
Nigeria.........................  ..................                  X
Oman............................  ..................                  X
Sao Tome and Principe...........                  X   ..................
Saudi Arabia....................  ..................                  X
Somalia.........................  ..................                  X
South Sudan.....................  ..................                  X
Sudan...........................  ..................                  X
Suriname........................  ..................                  X
Swaziland.......................  ..................                  X
Tajikistan......................  ..................                  X
Tanzania........................  ..................                  X
Turkmenistan....................  ..................                  X
Ukraine.........................  ..................                  X
Uzbekistan......................  ..................                  X
Yemen...........................  ..................                  X
Zimbabwe........................  ..................                  X
------------------------------------------------------------------------

Government by Government Assessments

    This section describes areas where such governments fell short of 
the Department's minimum requirements of fiscal transparency, and 
includes specific recommendations of short and long-term steps such 
governments should take to improve fiscal transparency. For those 
countries found to have made significant progress toward meeting the 
minimum requirements, the section also includes a brief description of 
such progress. Note that correcting previously identified deficiencies 
was a necessary but not sufficient condition for meeting the minimum 
requirements of fiscal transparency.
    Afghanistan: Despite significant improvements in recent years, 
revenue data is still considered unreliable. Financial allocations to, 
and earnings from, significant state-owned enterprises need to be 
clearly accounted for in public documents. While laws governing the 
award of contracts and licenses for natural resource extraction are 
publicly available, improvement is needed in how well they are 
followed. Afghanistan's fiscal transparency would be enhanced if the 
supreme audit institution were to audit the budget, including all line 
ministries.
    Algeria: Algeria's published budget does not include information on

[[Page 3000]]

receipts, expenditures, and balances of special treasury accounts, a 
persistent weakness for fiscal transparency in Algeria. Algeria's 
fiscal transparency would be enhanced by disclosing such financial 
flows as part of the published budget. In addition, budget reliability 
would be improved with an annual verification of revenues and 
expenditures by an independent supreme audit institution that can 
certify such financial statements meet internationally accepted 
accounting principles.
    Azerbaijan: While Azerbaijan has taken steps to ensure revenues 
from resource extraction are generally transparent, the government's 
criteria for awarding licenses for natural resources extraction are not 
made public. Outside the area of natural resource extraction, there is 
little publicly available information about the financial relationships 
between significant state-owned enterprises and the government. 
Azerbaijan's fiscal transparency would be enhanced by making public the 
criteria for awarding licenses for natural resource extraction, and 
publishing information on the relationships between state-owned 
enterprises and the government.
    Bahrain: Bahrain does not disclose the expenditures of the royal 
family in its publicly available budget. Bahrain's fiscal transparency 
would be enhanced by publicly disclosing royal family expenditures in 
its budget.
    Bangladesh: While the independence of Bangladesh's supreme audit 
institution is enshrined in the constitution, the supreme audit 
institution has not produced and made publicly available timely and 
comprehensive year-end evaluations of the government's accounts. This 
deficiency diminishes the reliability of the budget and accountability 
to the public. Bangladesh's fiscal transparency would be enhanced by 
working to ensure the supreme audit institution annually audits the 
central government budget and makes its findings publicly available.
    Burkina Faso: While budget documents are available to the public 
and summaries are published online, financial allocations to 
significant state-owned enterprises are not reflected in budget 
documents. Burkina Faso's fiscal transparency would be enhanced by 
using the opportunity provided by the formation of a new government to 
make further progress and improve budget documents to more fully 
include allocations to and earnings from state-owned enterprises.
    Burma: Burma does not yet have comprehensive and institutionalized 
procedures for budget execution, monitoring, and reporting, which has 
caused official fiscal data to be incomplete. Also, the supreme audit 
institution did not publish annual audits to verify revenues and 
expenditures. Nonetheless, Burma has made significant progress in 
improving fiscal transparency in recent years. This progress includes 
increasingly robust participation by parliament in the budget drafting 
process and several high-profile tenders that have been lauded for 
their fairness and transparency. These tenders follow the issuance by 
the president's office of a directive in April 2013 providing 
government ministries with standardized guidelines on conducting and 
awarding public tenders. Burma's fiscal transparency would be enhanced 
by putting in place clear and comprehensive procedures for budget 
management, monitoring and reporting, and conducting and making public 
annual audits of budget execution.
    Burundi: While expenditures are broken down by ministry and are 
included in the publicly available budget, budget documents do not 
provide reliable information about revenues. Basic data regarding 
contracts for natural resource extraction is legally available to any 
interested party, however, the Ministry of Mines and Energy does not 
consistently honor requests for information, and it is not clear 
whether Burundi follows its law and regulations for natural resource 
contracts. Burundi's fiscal transparency would be enhanced by providing 
a full and reliable accounting of all of its revenues and expenditures 
in its budgetary documents, making public basic data regarding 
contracts for natural resource extraction, and improving transparency 
regarding procedures in granting licenses for natural resource 
extraction.
    Cambodia: While Cambodia publishes a reasonably detailed budget, 
shortcomings in fiscal transparency constrain public participation in 
the budget process. Furthermore, the supreme audit institution has 
failed to publish timely annual audit reports. Cambodia has made 
significant progress in fiscal transparency during the past few years, 
in part by making the budget more comprehensive and accessible. The 
Ministry of Economy and Finance produced a Budget in Brief and made it 
available online. Cambodia's fiscal transparency would be further 
enhanced by continuing to ensure all government revenues are reflected 
in the budget and conducting and making public timely annual audits of 
the government's budget execution.
    Cameroon: Cameroon's budget does not provide data on all 
significant government expenditures, most notably state subsidies and 
allocations to significant state-owned enterprises. In addition, the 
country's supreme audit institution is not sufficiently independent. 
Cameroon made significant progress in 2013 on budget execution by 
establishing budget execution follow-up committees at national, 
regional, divisional, and local council levels, with participation by 
civil society groups. Cameroon's fiscal transparency would be enhanced 
if the central government budget provided transparency regarding all 
major government expenditures and the head of the supreme audit 
institution were not subject to executive authority or influence.
    Central African Republic: Following the seizure of power by the 
Seleka rebel alliance on March 24, 2013, and continuing through the 
review period, the government was unable to carry out normal functions 
because of the security situation and political crisis. When made 
possible by circumstances, the Central African Republic's fiscal 
transparency would be enhanced by drafting a budget and following 
normal budgeting procedures.
    Chad: While budget information is publicly available, the high 
degree of extra-budgetary spending indicates the budget is not 
substantially complete. Chad made significant progress in developing 
transparency regulations and governance standards, moving forward on 
conducting a post-execution review of the budget, and strengthening 
public financial management by working on limiting extra-budgetary 
expenditures. The government also created a Web site publishing budget 
and public financial information. Chad's fiscal transparency would be 
enhanced by improving its budgetary process and reducing extra-
budgetary spending by implementing the 2014 Organic Finance Law reforms 
and ensuring ministry-level budget staff are appointed and trained to 
increase public financial management capacity across the government.
    China: While China publishes annual budget documents, the 
government does not disclose all financial allocations to and earnings 
from numerous significant state-owned enterprises. Also, although the 
supreme audit institution audits all national government entities, 
including ministries and state-owned enterprises, it cannot be 
considered an independent agency, as it directly reports to China's 
State Council and is one of 25 ministries and commissions under the 
State Council's direct supervision. China's

[[Page 3001]]

fiscal transparency would be enhanced by explicitly detailing financial 
allocations to and earnings from state-owned enterprises and taking 
steps to increase the independence of the supreme audit institution.
    Comoros: Comoros' budget includes relevant revenues and 
expenditures, including allocations to and earnings from significant 
state-owned enterprises and natural resource extraction; however, 
budgets are not always followed, and may be changed with little to no 
legislative oversight. Budget documents are not readily available to 
the public. Technical assistance on budget execution from the IMF is 
ongoing, and Comoros has made significant progress in improving budget 
execution. Comoros' fiscal transparency would be enhanced by improving 
budget execution and oversight and making provisions for budget 
documents to be publicly available.
    Congo, Democratic Republic of the (DRC): Despite a public and open 
process for preparation, dissemination, and parliamentary debate of the 
budget, receipts and expenditures, broken down by ministry, are not 
substantially complete and reliable. The budget does not accurately 
reflect revenues from extractive industries. The criteria for awarding 
extractive contracts have not been codified. The country's supreme 
audit institution is not sufficiently independent, is insufficiently 
funded and trained, and does not conduct yearly comprehensive audits of 
spending. Significant progress has been made to improve the process by 
which salaries are paid to increase transparency and effectiveness in 
this area of budget execution. The DRC made significant progress in 
natural resource transparency with the publishing of information on 
existing natural resource contracts. The DRC's fiscal transparency 
would be enhanced by increasing the capacity and independence of the 
supreme audit institution, increasing transparency regarding the 
process and outcomes for awarding natural resource concessions, 
contracts, and licenses, and providing complete and reliable accounting 
of receipts and expenditures.
    Congo, Republic of the: The Republic of the Congo's budget includes 
significant gaps, relating both to petroleum revenues and to government 
expenditures. Debt obligations are not fully disclosed, and audits are 
not conducted in a timely manner. The Republic of the Congo's fiscal 
transparency would be enhanced by improving the completeness and 
reliability of its budget reporting, including disclosing sovereign 
debt obligations, and conducting audits in a timely manner.
    Dominican Republic: The Dominican Republic's budget lacks detail 
for large portions of spending by the Office of the Presidency, which 
accounts for nine percent of central government expenditure. Autonomous 
and decentralized institutions, and even some ministries, do not fully 
report revenue and expenditures during budget implementation, but only 
at the end of the accounting year. The Dominican Republic's fiscal 
transparency would be enhanced by taking additional steps to improve 
the completeness and timeliness of its budget, particularly for the 
Office of the Presidency.
    Egypt: Egypt's published budget does not disclose income and 
expenditures information for significant state-owned enterprises or 
presidential expenses. The process for awarding natural resource 
revenue contracts and the basic terms of natural resource concessions 
are also not publicly disclosed. Egypt's fiscal transparency would be 
enhanced by implementing reporting of state-owned enterprise finances 
and making public the process for awarding natural resource contracts 
and licenses and the basic terms of those contracts, such as to whom 
licenses have been awarded, covering which resources, and for what 
length of time.
    Ethiopia: While Ethiopia's budget documents are publicly available, 
they are not yet substantially complete due to the lack of information 
on the fiscal impact of significant state-owned enterprises. 
Additionally, the government's general processes for awarding natural 
resource concessions, contracts, and licenses are opaque. Ethiopia made 
significant progress in improving state-owned enterprise financial 
reporting during the review period by increasing in practice the 
oversight role played by the legislature in state-owned enterprise 
management and standardizing its contract award process. Ethiopia's 
fiscal transparency would be enhanced by including allocations to and 
earnings from state-owned enterprises in its budget and financial 
statements in both consolidated and stand-alone forms, providing 
disclosures of natural resource information in its budget, and 
providing more information to the public about the process and outcomes 
for awarding governmental contracts, licenses, and natural resource 
concessions.
    Fiji: During the review period, Fiji's publicly available budget 
documents did not provide a substantially full picture of the country's 
revenues and expenditures because of the lack of explanatory 
narratives. In addition, Fiji's failure to release the Auditor 
General's Report since 2008 undermined the public's ability to 
effectively monitor the budgetary process and negatively impacted the 
budget's reliability. Fiji's fiscal transparency would be enhanced by 
making public annual audit reports, along with comprehensive budgetary 
documents, including budget narratives.
    Gabon: Gabon's budget reliability is lacking. The supreme audit 
institution has been unable to complete verification of annual revenues 
and expenditures on a timely basis because of a lack of information 
from the government. The public does not have sufficient information 
about the budget. As of the close of the review period, Gabon has yet 
to make a complete 2014 budget publicly available. In addition, Gabon 
lacks transparency and reliability in government contracting and 
project financing. Gabon's fiscal transparency would be enhanced by 
ensuring timely publication of the supreme audit institution's yearly 
verification of the annual financial statement.
    Gambia, The: The Gambia does not include earnings from and 
allocations to significant state-owned enterprises in the general 
budget documents, although this information is available to the 
National Assembly after the fact. Additionally, the requirements for 
awarding natural resource exploration rights are not publicly 
available, and information on contracts or awards, including the 
identity of the party holding the rights, is not made available to the 
public. The Gambia's fiscal transparency would be enhanced by 
increasing transparency on how natural resources contracts are reviewed 
and what has been awarded, as well as increasing transparency regarding 
revenues from and allocations to state-owned enterprises.
    Guinea: Guinea does not make the budget accessible to the general 
public. The government also lacks a supreme audit institution. Guinea 
has not made the criteria for natural resource licensing tenders public 
and the budget does not provide information on revenues from 
significant state-owned enterprises, including those from natural 
resources. However, the government has made significant progress in 
making natural resource revenues transparent by making basic 
information on all current mining concessions public. Guinea's fiscal 
transparency would be enhanced by creating an independent supreme audit 
institution, making the budget publicly accessible, making public the 
criteria for natural resource licensing tenders, and

[[Page 3002]]

providing a comprehensive and reliable accounting of all revenues.
    Guinea-Bissau: Guinea-Bissau's budget process was not reliable 
during the review period, as a large amount of unbudgeted expenditure 
occurred, and fiscal controls were insufficient. The new government of 
Guinea-Bissau's fiscal transparency would be enhanced by using this 
window of opportunity to implement comprehensive public financial 
management reforms.
    Haiti: Although Haiti's budget is publicly available, the country's 
process for granting natural resource contracts lacks transparency and 
information on natural resources contracts is not published. Haiti's 
budget process does not consistently follow the country's established 
timetable and does not include earnings from significant state-owned 
enterprises. Haiti's fiscal transparency would be enhanced by improving 
the transparency of its system governing natural resource contracts, 
more closely following its budget timetable, and improving reporting 
for state-owned enterprises.
    Kazakhstan: While the budget is publicly available, information on 
allocations to and revenues from significant state-owned enterprises is 
not included. Estimated to produce approximately 40 percent of GDP, 
state-owned enterprises are believed to account for a sizeable portion 
of the government's allocations and revenues. Kazakhstan's fiscal 
transparency would be enhanced by including allocations to and revenue 
from state-owned enterprises in its budget.
    Laos: While Laos' budget is publicly available, some key budget 
documents were not published in a timely fashion. One quarter of 
government spending occurred outside of the National Assembly's 
authorized budget. Limited budgetary information was publicly available 
on state-owned enterprise finances and the process used to award 
natural resource contracts is generally not transparent or accessible 
by the public. The government made significant progress in 
strengthening the role of the supreme audit institution. Laos' fiscal 
transparency would be enhanced by publishing key budget documents in a 
timely manner, ensuring government spending is subject to parliamentary 
oversight, capturing allocations to and earnings from state-owned 
enterprises in the budget, and improving transparency and legal 
frameworks regarding the process for awarding natural resource 
concessions.
    Lebanon: Lebanon does not disclose financing or assistance in-kind 
received from foreign sources in its budget. Lebanon's budget also does 
not include transfers to or earnings from significant state-owned 
enterprises. Lebanon's budget data remain unreliable and its budgets 
are not subject to annual comprehensive audits. Lebanon's fiscal 
transparency would be enhanced by reporting all foreign financing and 
assistance and including detailed information for state-owned 
enterprises, public institutions, and all ministries in its budget. 
Lebanon's fiscal transparency would further be enhanced by establishing 
annual audits of its budget execution by an independent supreme audit 
institution.
    Libya: Libya's national budget does not include expenditures 
managed by the Ministry of Planning, and there is no verification by an 
independent supreme audit institution that annual receipts and 
expenditures meet internationally accepted accounting principles. 
Libya's fiscal transparency would be enhanced by including all 
expenditures in the annual budget approved by Libya's parliament and 
ensuring financial statements are verified by an independent supreme 
audit institution.
    Madagascar: The former government of Madagascar did not follow 
procedures outlined under domestic law for making awards of extractive 
industry contracts, nor did the former government publish results in a 
consistent manner. Additionally, budget documents under the former 
government did not match actual spending, and follow-up reporting of 
actual receipts and expenditures was inconsistent and inadequate. 
Madagascar's supreme audit institution has not published a report since 
2006. Madagascar's fiscal transparency would be enhanced by improving 
its extractives contracting procedures and providing information on 
outcomes to the public. Madagascar's fiscal transparency would be 
further enhanced by improving budgeting processes.
    Malawi: While Malawi's budget documents are substantially complete, 
the supreme audit institution lacks full independence and a clear 
reporting structure. Revenue from state-owned enterprises and natural 
resources is included in the budget. However, the government's 
procedures for awarding contracts and licenses for natural resource 
extraction are not regularly publicly available, and, once awarded, the 
basic information of such contracts and licenses is not routinely made 
available to the public. As Malawi develops its emerging extractive 
industry sector, it needs to improve transparency with regard to 
contracts and licenses. Malawi's fiscal transparency would be enhanced 
by addressing potential inconsistencies between its Constitution and 
the relevant statutory law regarding the supreme audit institution's 
reporting structure.
    Maldives: While Maldives' budget is publicly available and provides 
a substantially complete picture of the country's revenue and 
expenditures, the figures are not always reliable. The independent 
supreme audit institution does not conduct and make public year-end 
audits of the central government budget. Maldives' fiscal transparency 
would be enhanced by continuing to improve its public financial 
management. Maldives' fiscal transparency would be further enhanced if 
the supreme audit institution were to conduct and make publicly 
available year-end audits of the central government budget.
    Nicaragua: Nicaragua's budget does not provide information on 
substantial financial support provided to the government by Venezuela. 
The reporting on allocations to and earnings from significant state-
owned enterprises also lacks detail. Nicaragua's fiscal transparency 
would be enhanced by fully reporting off-budget support provided to the 
government and improving reporting on allocations to and earnings from 
state-owned enterprises.
    Niger: Niger's central budget is not substantially complete because 
it does not reflect earnings of significant state-owned enterprises or 
revenues and debt associated with oil production. The government made 
significant progress in 2013 with the first release of oil revenue 
numbers and the first audit of the oil industry. Niger's fiscal 
transparency would be enhanced by ensuring the budget includes all 
revenue and expenditures, including natural resources.
    Nigeria: While Nigeria's budgetary process meets and in many ways 
exceeds many elements of the Department's minimum requirements in 
budgetary areas, Nigeria does not meet the Department's overall minimum 
requirements due to concerns in the natural resources sector. While the 
criteria for awarding natural resource extraction concessions is made 
public, actual practices are opaque and do not appear to always conform 
to the criteria. Significant off-budget spending on fuel subsidies is 
also of concern. Additionally, while the Finance Ministry publishes 
aggregate revenues, lack of transparency in the revenues and 
expenditures of Nigeria's flagship oil and gas sector state-owned 
enterprise, the Nigerian National Petroleum Corporation (NNPC), impedes 
Nigeria's overall fiscal transparency. Nigeria's

[[Page 3003]]

fiscal transparency would be enhanced by conducting a full audit, to 
international standards, of NNPC. The Petroleum Industry Bill, once 
implemented, could partially address the transparency concerns in the 
oil and gas sector. Nigeria's fiscal transparency would be further 
enhanced by moving off-budget spending on budget.
    Oman: Oman does not disclose the expenditures of the royal family 
in its publicly available budget. Oman's fiscal transparency would be 
enhanced by publicly disclosing royal family expenditures in its 
budget.
    Sao Tome and Principe: While Sao Tome and Principe's budget can be 
considered substantially complete, its budget documents do not 
currently comply with internationally accepted accounting principles. 
Sao Tome and Principe publishes periodic reports throughout the year 
evaluating the budget execution, though it does not publish an end-of-
year report. While Sao Tome and Principe was not assessed in previous 
reports, the government has made significant progress on fiscal 
transparency, including passing legislation in recent years requiring 
all payments to government agencies over five dollars to be made 
directly at the Central Bank and all salary payments to civil servants 
be paid directly to employees' bank accounts. Sao Tome and Principe's 
fiscal transparency would be enhanced by adopting internationally 
accepted accounting principles for public financial documents and 
producing and making public an annual report on overall budget 
execution.
    Saudi Arabia: Saudi Arabia does not publish a detailed annual 
budget that discloses revenues and expenditures broken down by 
ministry. While Saudi Arabia discloses the contribution of natural 
resource revenues to the budget in an annual IMF report, it does not 
publish such data in its publicly available budget, nor does it 
disclose the expenditures of the royal family in the publicly available 
budget. Saudi Arabia's fiscal transparency would be enhanced by 
publishing such a budget. Saudi Arabia's fiscal transparency would be 
further enhanced if the supreme audit institution were to publish an 
annual verification that revenues and expenditures were carried out in 
accordance with internationally accepted accounting principles.
    Somalia: Partly due to a severe lack of institutional capacity and 
funds, Somalia does not have an effective public financial management 
system. Ministries do not follow budget procedures. Somalia does not 
have an effective, functioning, independent supreme audit institution. 
The government does not make basic information about the results of 
concessions or natural resource contracts available. Somalia's fiscal 
transparency would be enhanced by implementing comprehensive public 
financial management reforms.
    South Sudan: South Sudan's budget execution is unreliable, with 
some ministries overspending while others spend less than allocated. 
Fiscal activities are not subject to effective internal oversight and 
safeguards, and the supreme audit institution has not published a 
report on the budget in several years. Additionally, while the 2012 
Petroleum Act requires the government to make information on tenders, 
licensing, and petroleum agreements publicly available, it is not clear 
those requirements have been carried out in practice. South Sudan's 
fiscal transparency would be enhanced by implementing comprehensive 
public financial management reforms and making available information on 
tenders, licensing, and petroleum agreements.
    Sudan: Publicly available budget documents do not provide a full 
picture of Sudan's revenues and expenditures, including natural 
resource revenues. There are no procedures in place allowing for 
parliamentary review of the allocations to and earnings from 
significant state-owned enterprises, particularly those operated by the 
security services. Sudan's fiscal transparency would be enhanced by 
providing a full accounting of the allocations to and earnings from 
state-owned enterprises and allowing for legislative oversight of 
expenditures of the security services.
    Suriname: Suriname does not fully report on the financial 
performance of some significant state-owned enterprise and related 
government transfers. The executive branch often fails to provide 
Suriname's supreme audit institution with sufficient information to 
conduct thorough oversight. The government does not disclose 
information about how it awards natural resource contracts and 
licenses, nor does it disclose basic information on awards granted. 
Suriname's fiscal transparency would be enhanced by improving the 
transparency and reporting of natural resource contracts, providing 
more robust reporting for state-owned enterprises, and strengthening 
its auditing function.
    Swaziland: Swaziland's budget lacks transparency with regard to 
allocations to and earnings from significant state-owned enterprises 
and with regard to natural resource revenues. Additionally, Swaziland 
does not have a functioning, independent supreme audit institution, and 
there are concerns about off-budget spending. Swaziland's fiscal 
transparency would be enhanced by ensuring that all revenues and 
expenditures are reflected in the budget, including natural resource 
revenues and allocations to, or earnings from, state-owned enterprises.
    Tajikistan: Tajikistan's budget is not substantially complete, and 
revenues and expenditures are not broken down by ministry. Tajikistan's 
fiscal transparency would be enhanced by publishing a detailed budget, 
carrying out audits of yearly expenditures by an independent supreme 
audit institution, and engaging the public in the budget process.
    Tanzania: Tanzania has used pension funds to support off-budget 
projects through loans that have at times not been included in the 
country's debt obligations. In addition, Tanzania's procedures for 
awarding contracts and licenses for natural resource extraction are not 
clear. Tanzania's fiscal transparency would be enhanced by clearly 
publicizing and following procedures for awarding contracts and 
licenses for natural resource extraction and by including all 
governmental expenditures and debt obligations in the budget.
    Turkmenistan: The budget is not substantially complete, nor does it 
provide a breakdown of revenue and expenditures by individual ministry. 
No information on allocations from the budget to significant state-
owned enterprises is disclosed. Turkmenistan's fiscal transparency 
would be enhanced by making this information publicly available. 
Turkmenistan's fiscal transparency would be further enhanced by 
disclosing proceeds from the sale of oil and natural gas, which 
constitute the majority of the government's revenues, and making public 
the process for awarding government contracts and licenses for natural 
resources.
    Ukraine: While Ukraine's national budget and budget execution 
reports are readily available to the public, the former government of 
Ukraine did not include quasi-fiscal activities in the energy sector in 
the state budget. The audit agency was not permitted to review 
government revenues or the financials of significant state-owned 
enterprises. Criteria for natural resource tenders, aside from 
production sharing agreements for oil and gas, were not made public. 
Ukraine's fiscal transparency would be enhanced by including quasi-
fiscal energy sector activities in the budget, allowing the audit 
agency to review revenues of the

[[Page 3004]]

government and the financials of state-owned enterprises, and making 
public the criteria for all natural resource tenders.
    Uzbekistan: The budget process is not transparent, as budget 
discussions in the legislative branch are not open to the public. Only 
a general overview of the budget is publicly available; a breakdown of 
revenues and expenditures by ministry is not disclosed. Information on 
revenue from the extraction and sale of natural resources is not 
available to the public. While criteria for awarding natural resource 
contracts are publicly available, the process of awarding contracts in 
practice is not transparent. Uzbekistan's fiscal transparency would be 
enhanced by making the budget publicly available. Uzbekistan's fiscal 
transparency would be further enhanced by providing information on 
revenue from the extraction and sale of natural resources and ensuring 
the process of awarding contracts is transparent.
    Yemen: Yemen's annual budget lacks sufficient information regarding 
allocations to and revenue from significant state-owned enterprises. 
The supreme audit institution does not publish its annual verifications 
that statements of revenues and expenditures meet internationally 
accepted accounting principles. Yemen's fiscal transparency would be 
enhanced by providing sufficient detail in the section of the budget 
devoted to state-owned enterprises. Yemen's fiscal transparency would 
be further enhanced if the supreme audit institution were to make such 
audits public each year.
    Zimbabwe: Zimbabwe's budget lacks transparency with regard to 
financial flows to and from significant state-owned enterprises and 
with regard to natural resource revenues, including mining contracts. 
Zimbabwe's fiscal transparency would be enhanced by improving 
transparency in its budget management, including greater transparency 
on the country's debts, and including a substantially complete picture 
of natural resource revenues in the budget. Zimbabwe's fiscal 
transparency would be further enhanced by making public the criteria 
and process for awarding natural resource contracts and licenses and 
the basic terms of those contracts, such as to whom licenses have been 
awarded, which resources are covered, and the length of the contract or 
license.

    Dated: December 31, 2014.
Heather Higginbottom,
Deputy Secretary of State for Management and Resources, Department of 
State.
[FR Doc. 2015-00792 Filed 1-20-15; 8:45 am]
BILLING CODE 4710-07-P
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