Budget Transparency & Comprehensiveness (AFE Regional Workshop)

1. Budget Transparency & Comprehensiveness(AFE Regional Workshop) Session 8: Transparent & Comprehensive Budget Documentation and Public Access Davina Jacobs Public Financial Management Division Fiscal Affairs Department, IMF Zanzibar, October 20-22, 2009

2. Overview • Introduction • What does the FT Code recommend? • What Type of Documents are associated with the Budget Presentation? • What should the Budget cover? • Public Availability of the Fiscal Information • Study of G20 Countries & their Budget Documents • Conclusions

3. I. Introduction • Making fiscal information available to the public is a defining characteristic of fiscal transparency. • Principles and practices in this regard concern provision of comprehensive information on fiscal activity & govt. objectives and presentation of such information in a way that facilitates policy analysis and promotes accountability. • A cornerstone for ensuring the timely and uniform availability of fiscal information is that it can be readily accessed free of charge on the Internet.

4. II. What does the FT Code recommend? The Code states following requirements: • section 3.1 - “the public should be provided with comprehensive information on past, current, and projected fiscal activity and on major fiscal risks”. • section 3.2 – “fiscal information should be presented in a way that facilitates policy analysis and promotes accountability”. • section 3.3 – “a commitment should be made to the timely publication of fiscal information”.

5. III. What Type of Documents are associated with the Budget Presentation? 1. Annual Budget presentation • Includes detailed projections of revenues, expenditures, balances, and borrowing; proposed fiscal measures; and appropriations accounts containing details of the expenditure authorized or to be authorized by the legislature through a budget (appropriations) law. Transactions are generally classified by administrative unit and item of expenditure.

6. 2. Budget supporting documents: • Includes various statements (e.g., providing details of extrabudgetary funds, autonomous agencies, quasi-fiscal activities, and fiscal risks) and background papers (e.g., on the fiscal and economic outlook).

7. 3. With-in year budget reports: • Reports on fiscal outturns produced on a monthly or (at least) quarterly basis using budgetary and extrabudgetary accounts and including debt.

8. 4. Final accounts: • Final audited accounts are presented to the legislature at year’s end to provide assurance of regularity and consistency with appropriations. 5. Other reports include financial and GFS2001 reports.

9. IV. What should the Budget cover? • Budget docs, including final accounts, and other published fiscal reports should cover all budgetary and extrabudgetary activities of Central Govt (CG). • Info comparable to that in annual budget should be provided for outturns of at least 2 preceding fiscal years, together with forecasts and sensitivity analysis for the main budget aggregates for at least 2 years following the budget. • Statements describing the nature and fiscal significance of CG tax expenditures, contingent liabilities, and QFAs should be part of budget docs, together with an assessment of all other major fiscal risks.

10. Receipts from all major revenue sources, including resource-related activities and foreign assistance, should be separately identified in the annual budget presentation. • CG should publish information on level and composition of its debt and financial assets, significant nondebt liabilities (including pension rights, guarantee exposure, and other contractual obligations), and natural resource assets. • Budget docs should report the fiscal position of subnational govts and finances of public corporations. • Govt should publish a periodic report on LT public finances.

11. V. Public Availability of the Fiscal Information Fiscal information should be presented in a way that facilitates policy analysis and promotes accountability: • A clear and simple summary guide to the budget should be widely distributed at the time of the annual budget. • Fiscal data should be reported on a gross basis, distinguishing rev., exp. and financing, with exp. classified by economic, functional, and administrative category. • Overall balance and gross debt of the general govt, or their accrual equivalents, should be standard summary indicators of the govt fiscal position. They should be supplemented, where appropriate, by other fiscal indicators, such as the primary balance, public sector balance, and net debt. • Results achieved relative to the objectives of major budget programs should be presented to the legislature annually.

12. A commitment should be made to the timely publication of fiscal information: • Timely publication of fiscal information should be a legal obligation of govt. • Advance release calendars for fiscal information should be announced and adhered to.

13. VI. G20 Country Study Results of a recent FAD study on budget docs in G20 countries show: • Time horizon of budget: MT up to 5 yrs • Coverage of budget: CG, some cases GG • Structure of budget docs: expansive supporting docs, “guides to the budget”, etc. • Recurrent/capital split of budget: not used • Details of budget appropriations: varies, most countries up to program level • Program budgets used in many countries, with performance elements.

14. VII. Conclusions • Clear emphasis on importance of publishing comprehensive fiscal information. • Useful to take note of the good practices in fiscal reporting in Revised Manual on FT. • As civil society becomes more involved in budget process, information requirements for budget docs expands – also impact of “performance orientation” to the budget.

15. Thanks!