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This paper investigates the effect of fiscal transparency on market assessments of sovereign risk, as measured by credit ratings. It measures this effect through a direct channel (uncertainty reduction) and an indirect channel (better fiscal policies and outcomes), and it differentiates between advanced and developing economies. Fiscal transparency is measured by an index based on the IMF’s Reports on the Observance of Standards and Codes (ROSCs). We find that fiscal transparency has a positive and significant effect on ratings, but it works through different channels in advanced and developing economies. In advanced economies the indirect effect of transparency through better fiscal outcomes is more significant whereas for developing economies the direct uncertainty-reducing effect is more relevant. Our results suggest that a one standard deviation improvement in fiscal transparency index is associated with a significant increase in credit ratings: by 0.7 and 1 notches in advanced and developing economies respectively.
Transparency in government operations is widely regarded as an important precondition for macroeconomic fiscal sustainability, good governance, and overall fiscal rectitude. Notably, the Interim Committee, at its April and September 1996 meetings, stressed the need for greater fiscal transparency. Prompted by these concerns, this paper represents a first attempt to address many of the aspects of transparency in government operations. It provides an overview of major issues in fiscal transparency and examines the IMF's role in promoting transparency in government operations.
This departmental paper investigates how countries in Central, Eastern, and Southeastern Europe (CESEE) can improve fiscal transparency, thereby raising government efficiency and reducing corruption vulnerabilities.
This Fiscal Transparency Evaluation report highlights that Uzbekistan is embarking on a comprehensive reform program to strengthen public financial management and fiscal transparency. Wide-ranging reforms to improve the coverage, reliability, quality, and accessibility of fiscal reports are being developed and implemented, and some good progress already made. This assessment of fiscal transparency practices has been undertaken to support the government’s efforts to increase transparency by identifying priority areas for reform. An evaluation of practices against the IMF’s Fiscal Transparency Code (the Code) finds that tangible gains have been made over 2017 and 2018. In several areas where Uzbekistan’s practices do not currently meet the basic standard required under the Code, quick progress can be made. The report also provides a more detailed evaluation of Uzbekistan’s fiscal transparency practices and recommended reform priorities. Strengthening legislative oversight of the state budget with a view to reducing the extent to which in-year changes can be made to aggregate expenditures without prior parliamentary approval.
This paper finds that reforms introduced by the IMF to promote transparency have created more informed markets and reduced borrowing costs for those emerging market countries that volunteered for them. Using a quarterly panel estimation with fixed country effects, we find that sovereign spreads fall following the adoption of three different transparency reforms. The effects are economically important, especially for those countries with low initial transparency. We use two-stage least squares to address any endogeneity in the timing of reforms exploiting internal IMF timetables that are unrelated to country events. Next, using a panel GARCH specification, we show that spreads move more than normal in the days immediately following publication of IMF country documents.
This publication gives a comparative review of corporate governance practices in relation to state-owned enterprises in OECD countries, including scale and organisation, board composition and functions, relationships with non-state shareholders, the role of stakeholders transparency and disclosure.
A number of member countries have expressed interest in advice regarding disclosure and management of fiscal risks (defined as the possibility of deviations of fiscal outcomes from what was expected at the time of the budget or other forecast). This paper analyzes the main sources of fiscal risks and—building on an overview of existing practices in a wide range of countries—provides practical suggestions in this area, including a possible Statement of Fiscal Risks and a set of Guidelines for Fiscal Risk Disclosure and Management.
This project, based on the Public Expenditure and Financial Accountability (PEFA) data set, researched how PEFA can be used to shape policy development in public financial management (PFM) and other major relevant policy areas such as anticorruption, revenue mobilization, political economy analysis, and fragile states. The report explores what shapes the PFM system in low- and middle-income countries by examining the relationship between political institutions and the quality of the PFM system. Although the report finds some evidence that multiple political parties in control of the legislature is associated with better PFM performance, the report finds the need to further refine and test the theories on the relationship between political institutions and PFM. The report addresses the question of the outcomes of PFM systems, distinguishing between fragile and nonfragile states. It finds that better PFM performance is associated with more reliable budgets in terms of expenditure composition in fragile states, but not aggregate budget credibility. Moreover, in contrast to existing studies, it finds no evidence that PFM quality matters for deficit and debt ratios, irrespective of whether a country is fragile or not. The report also explores the relationship between perceptions of corruption and PFM performance. It finds strong evidence of a relationship between better PFM performance and improvements in perceptions of corruption. It also finds that PFM reforms associated with better controls have a stronger relationship with improvements in perceptions of corruption compared to PFM reforms associated with more transparency. The last chapter looks at the relationship between PEFA indicators for revenue administration and domestic resource mobilization. It focuses on the credible use of penalties for noncompliance as a proxy for the type of political commitment required to improve tax performance. The analysis shows that countries that credibly enforce penalties for noncompliance collect more taxes on average.
Provides an authoritative account and explanation of the revised IMF Code of Good Practices on Fiscal Transparency (the Code), used by countries undertaking assessments of the transparency of their fiscal management practices (including so-called fiscal ROSCs), legislatures, civil society organizations, economists, and financial analysts. Supplemented by the revised Guide on Resource Revenue Transparency, it identifies numerous benefits from fiscal transparency, including providing citizens with information to hold governments accountable for their policy choices, informing and improving the quality of economic policy decisions, highlighting potential risks to the fiscal outlook, and easing a country's access to international capital markets.--Publisher's description.
This paper integrates into the Fiscal Transparency Code (FTC) a new fourth pillar (Pillar IV) on natural resource revenue management. This completes the pending update to the IMF's FTC, as set out by staff in 2014 (see IMF 2014a).