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Many studies have highlighted how failures of public corporations (otherwise known as state-owned enterprises) can result in huge economic and fiscal costs. To contain the risks associated with these costs, an effective regime for the financial supervision and oversight of public corporations should be put in place. This note discusses the legal, institutional, and procedural arrangements that governments need to oversee the financial operations of their public corporations, ensure accountability for their performance, and manage the fiscal risks they present. In particular, it recommends that governments should focus their surveillance on public corporations that are large in relation to the economy, create fiscal risks, are not profitable, are unstable financially, or are heavily dependent on government subsidies or guarantees.
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.
Investment in infrastructure can be a driving force of the economic recovery in the aftermath of the COVID-19 pandemic in the context of shrinking fiscal space. Public-private partnerships (PPP) bring a promise of efficiency when carefully designed and managed, to avoid creating unnecessary fiscal risks. But fiscal illusions prevent an understanding the sources of fiscal risks, which arise in all infrastructure projects, and that in PPPs present specific characteristics that need to be addressed. PPP contracts are also affected by implicit fiscal risks when they are poorly designed, particularly when a government signs a PPP contract for a project with no financial sustainability. This paper reviews the advantages and inconveniences of PPPs, discusses the fiscal illusions affecting them, identifies a diversity of fiscal risks, and presents the essentials of PPP fiscal risk management.
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.

Namibia

International Monetary Fund. Fiscal Affairs Dept.

Published: 2018-08-16

Total Pages: 78


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This Technical Assistance report discusses measures proposed to assess and manage fiscal risks from state-owned entities and public-private partnerships in Namibia. Fiscal risks from public entities (PEs) materialize when funding requirements are higher than expected or revenues shortfalls occur. The government’s strategy for managing PE related fiscal risks should be informed by the likelihood of PE experiencing difficulties and, in such an event, the magnitude of the potential impact on the government. A two-step methodology was proposed for assessing the likelihood of fiscal risks materializing from PE. The authorities are also considering legislative amendments to strengthen the institutional arrangements for supervising PE.
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.

India

International Monetary Fund. Fiscal Affairs Dept.

Published: 2020-06-26

Total Pages: 65


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Although Tamil Nadu’s public financial management has been characterized by strong fiscal discipline to date, risks and challenges are emerging. The State has largely observed the Fiscal Responsibility Act targets on debts and deficit (25 percent and 3 percent to GSDP, respectively) except during the electricity bailout in 2016–17.1 However, these targets appear to have been met by (1) controlling and delaying expenditure, (2) underallocating mandated payments to various reserve funds, and (3) allowing off-budget borrowing by Public Sector Undertakings (PSUs). Accordingly, the State’s borrowing capacity is restricted, leaving limited fiscal space to address high priority needs in education, health, electricity, roads, and water sectors, as well as to address growing infrastructure pressures. More than 63 percent of the State’s spending on current items is committed, to salaries, pensions, and interest payments. Little room remains for additional borrowing to fund spending pressures; moreover, climate change is likely to exacerbate fiscal risks from water stress and natural disasters.

Georgia

International Monetary Fund. Fiscal Affairs Dept.

Published: 2018-11-07

Total Pages: 62


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The Government’s decision to strengthen the infrastructure governance through improving the public investment management (PIM) and the public-private partnerships (PPPs) frameworks, is both timely and important. The government has an ambitious public investment agenda, to be implemented both through traditional public investment and with the help of private investors in the form of PPPs. Given the need to preserve fiscal sustainability in a context of limited fiscal space, avoiding inefficiencies and managing fiscal costs and risks arising from infrastructure projects will be crucial for advancing the government’s public investment agenda. The authorities are working on a broad range of public financial management reforms, including improving the PIM framework and the legal and regulatory framework for PPPs and PPAs. Over the last decade, public investment in Georgia has been similar to the average of emerging market economies (EMEs). Since the mid-2000s, public investment accounted, on average, for one third of total investment. Public investment remained volatile, reaching a peak of 8.6 percent of GDP in 2007, declining in the aftermath of large global and regional shocks, and stabilizing at about 5.5 percent of GDP in recent years.

Ukraine

International Monetary Fund. Fiscal Affairs Dept.

Published: 2019-11-22

Total Pages: 79


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This Technical Assistance paper on Ukraine reviews the results of the 2015 fiscal decentralization reform and the amendments to the Budget Code for implementation of certain Public Financial Management reforms. Several design issues are slowing the process of voluntary amalgamation of territorial communities and will lead to a proliferation of small units, with low potential for financial self-sufficiency. Achieving both an overall balance and a vertical fiscal balance, whereby own revenues cover basic expenditure responsibilities and dependence on State grants and subventions is minimized, would require a combination of changes to the revenue-sharing arrangements and expenditure assignments. There is no structured arrangement for ensuring a collaborative and coordinated approach in pursuing broad fiscal objectives and ensuring fiscal sustainability at all levels of government. The authorities should take steps to ensure an active and open dialogue between the different levels on the conduct of fiscal policy.