How to Enhance the Transparency of Government Operations

• Pages: 55-56

Page 55

Fiscal transparency-public openness in government structure and functions, fiscal policy intentions, public sector accounts, indicators, and forecasts-is widely regarded as fundamental to sound economic policy and has drawn increasing attention from policymakers in recent years. Notably, the IMF's Interim Committee's 1996 Declaration on Partnership for Sustainable Global Growth stated that "it is essential to enhance the transparency of fiscal policy by persevering with efforts to reduce off-budget transactions and quasi-fiscal deficits." Occasional Paper No. 158, Transparency in Government Operations, by George Kopits and Jon Craig, addresses many of the aspects of transparency in government operations. It discusses the major issues surrounding fiscal transparency and examines the IMF's role in promoting transparency in government operations. Kopits spoke with the IMF Survey about the study.

IMF Survey: What aspects of transparency does your study deal with?

KOPITS: The study deals with openness toward the electorate and financial markets over practically the entire spectrum of public sector activity, including behavioral, administrative, regulatory, accounting, and forecasting aspects. In each of these areas, our study identifies good practices and, wherever possible, provides country examples. A fundamental issue is the clear demarcation between the public and private domains, as reflected in, for example, conflict-of-interest rules for public officials and in freedom-of-information legislation. Likewise, it is important to hold an open legislative debate on the government's budget proposals, accompanied by estimates of tax expenditures and of the cost of quasi-fiscal operations conducted by nonfinancial enterprises or by financial institutions on behalf of the government.

Our study calls for a set of clear public accounts and forecasts that rely on accrual-based recording- supplemented by cash flow data-with consistency between the budget statement and the government balance sheet. The latter, of course, is critical for determining the magnitude and composition of public sector indebtedness, which should be published along with data on unfunded contingent liabilities and commitments. For any government, it is essential to issue periodic statements of its policy goals and quantitative targets, supported by realistic and well-documented short-term forecasts, plus medium- to long-term scenarios-to determine, respectively, the...