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Detailed explanation
of the High-Level Principles

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I. Introduction

a)  The purpose of the Expanded Version

The Global Initiative for Fiscal Transparency was formed in 2011 as an action network to launch a reinvigorated campaign for improvements in fiscal transparency, by bringing a wider range of stakeholders together around a broadened and stronger set of standards and activities.

One of the network’s first initiatives was to review the plethora of international standards and norms on fiscal transparency for comprehensiveness and consistency. This prompted the development in 2012 of the High-Level Principles on Fiscal Transparency, Participation and Accountability, which were ‘…intended to guide policy makers and all other stakeholders in fiscal policy in their efforts to improve fiscal transparency, participation and accountability, and to help promote improvements in the coverage, consistency and coherence of the existing standards and norms for fiscal transparency.’

The purpose of this Expanded Version is to explain the role played by the GIFT High-Level Principles in promoting greater fiscal transparency globally, as well as to set out the relationship between each of the High-Level Principles and the corresponding standards, norms,  assessments, and  country practices to which they relate.

The Expanded Version should help readers to quickly gain an overview of the current multiplicity of instruments in relation to each other, to find effective entry points to the more detailed sources of information and guidance, and to consider where standards and assessments of practice may need strengthening to better realise the aspirations in the High-Level Principles.

The Expanded Version captures the major changes that have taken place over the last few years to international fiscal transparency standards and assessment tools, given that the main instruments have all been substantially revised since 2013. The completion of this document therefore comes at an opportune time, when the normative architecture seems likely to remain comparatively stable in the short to medium term.

In addition to information on fiscal transparency standards and norms, the Expanded Version contains information on country practices – cross-country data mainly from the Open Budget Survey, references to good practice in selected countries, and links to published reports assessing country practices. Together with the sources of further information and guidance, readers can use the Expanded Version as a starting point for further investigation into the full range of issues relating to  fiscal transparency, public participation or accountability.

Readers interested in further overview information on fiscal transparency standards should also refer to the 2017  OECD Budget Transparency Toolkit: http://www.oecd.org/gov/budgeting/budget-transparency-toolkit.htm . The Toolkit, which was designed with the participation of the GIFT Network, provides an alternative way of navigating to the various global fiscal transparency institutions, standards, and guidance materials, by using a structure – developed by the OECD – based around five key institutional or sectoral areas.

The Toolkit and this Expanded Version of the GIFT High-Level Principles are complementary. They use different organizing frameworks to cover a similar body of international fiscal transparency instruments.

A distinct contribution of this document is to place the international architecture of fiscal transparency instruments in the context of the GIFT High-Level Principles that are increasingly being used to promote greater coherence and comprehensiveness across instruments. Through disseminating information on the background to and objectives of the High-Level Principles and their role in identifying gaps and promoting coherence, the aim is to promote the further strengthening of fiscal transparency instruments and their more effective implementation.

One particular area where this Expanded Version should prove helpful is with respect to the growing interest in public participation in fiscal policy, which is being described as ‘the next frontier in fiscal transparency’.[1] The first generation of international fiscal transparency reforms focused on the public disclosure of fiscal information. Experience has shown, however, that disclosure is a necessary but not a sufficient condition for accountability. Attention is now increasingly moving to translating disclosure into more effective accountability by means of greater public engagement on fiscal management.

High-Level Principe 10 was the first international fiscal transparency norm to assert that citizens have a right to direct public participation in the design and implementation of fiscal policies. Given the scarcity of relevant international instruments, GIFT embarked on a multi-year work program to document country practices, understand the factors driving participation reforms, develop new instruments to guide and to measure country practices, and release a dedicated Guide on Public Participation. Readers interested in this burgeoning field should find the section in this document on High-Level Principle 10 particularly helpful.

In summary, then, the intention is that the Expanded Version will help to stimulate more effective efforts to promote greater accountability for taxation and public spending, strengthen incentives on governments to manage public resources more openly, and contribute to better economic, social and environmental outcomes.

b) The structure of the Expanded Version

The Expanded Version explains each of the ten High-Level Principles in more detail, and provides additional information and sources of guidance for those seeking to apply the Principles in practice.

For each of the ten Principles the document sets out:

  • Why the Principle is important.
  • As necessary, definitions of key terms.
  • How the Principle is reflected in existing international norms and standards.
  • Selected country practices with respect to adhering to the Principle.
  • Sources of further information and guidance.

This document also contains a glossary of common terms.

The Expanded Version will be updated regularly. Suggestions for additions or improvements – such as additional examples of good country practices, further sources of useful guidance material, or new reports on assessments of country practices – should be sent to the GIFT Coordination Team at info@fiscaltransparency.net

For regular monthly updates on developments in fiscal transparency and public participation, subscribe to GIFT’s Newsletter: http://www.fiscaltransparency.net/news/

[1] Participation is the next transparency frontier for OGP by Krafchik and Guerrero, at http://www.fiscaltransparency.net/blog/

II. The formation of GIFT and the role of the High-Level Principles

The Global Initiative for Fiscal Transparency was formed in 2011 following the Global Financial Crisis (GFC). Its formation, initiated by the World Bank, the International Budget Partnership, the International Monetary Fund, and the governments of Brazil and Philippines, reflected a sense of urgency that the GFC had revealed fundamental weaknesses in the state of fiscal transparency and a lack of accountability for the management of public finances, particularly in advanced economies.[1]

GIFT’s founders were also concerned by the on-going failures in the governance of fiscal policy that continued to see opportunities squandered for economic and social development globally. For instance, the International Budget Partnership concluded: ‘Yet the Open Budget Survey 2012 finds that the state of budget transparency and accountability is generally dismal. Only a minority of governments publish significant budget information. Fewer still provide appropriate mechanisms for public participation, and independent oversight institutions frequently lack appropriate resources and leverage. A large number of countries have made no changes, or made only a few changes, to their budget systems in recent years and continue to provide insufficient information. Some countries are even headed in the wrong direction; their systems have become more closed.’[2]

GIFT’s formation was intended to launch a reinvigorated campaign for improvements in fiscal transparency by bringing a wider range of stakeholders together around a broadened and stronger set of standards and activities.[3] The goal was to connect country governments with international and national CSOs and with institutions providing technical assistance and support to Public Financial Management reform (the IMF and the World Bank). GIFT was created as an action network i.e. a forum for these different organizations to find and share solutions to challenges in fiscal transparency in order to ‘make things happen’.

Figure 1 illustrates GIFT’s Theory of Change.

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Figure 1. The GIFT Theory of Change

Based on this theory of change, GIFT’s work program has focused on four areas:

    • Promoting convergence between, and increased coverage and coherence of international standards and norms on fiscal transparency, incorporating the rights of access to information and of direct public participation.
    • Creating a forum to share experiences and good practices between CSOs, governments, experts, International Financial Institutions, and non-state funders.
    • Strengthening incentives for reform by supplying research, evidence, and practical advice.
    • Helping take advantage of technological advances to improve the accessibility and dissemination of budget and fiscal data, and to facilitate and leverage users’ feedback.

With respect to the norms workstream, one of GIFT’s first activities was to review the plethora of international standards and norms on fiscal transparency for comprehensiveness and consistency. The assessment found that, while the range of consensus had grown, significant gaps and inconsistencies remained.[4]

This prompted the development in 2012 of the GIFT High-Level Principles on Fiscal Transparency, Participation and Accountability, which were intended to promote coherence and convergence across standards over time. The draft Principles were the subject of deliberation and discussion across the multi-stakeholder network, involving international standard-setters, national ministries of finance and related agencies from countries at different levels of development, and a range of international and national civil society organisations.

As such, the Principles reflect a shared set of norms that all GIFT’s stakeholders are committed to. They both frame and anchor the operationalization of the Principles in standards and norms, and instruments that assess practices.

As the preamble to the Principles stated, they were: ‘…intended to guide policy makers and all other stakeholders in fiscal policy in their efforts to improve fiscal transparency, participation and accountability, and to help promote improvements in the coverage, consistency and coherence of the existing standards and norms for fiscal transparency.’

The High-Level Principles are reproduced in Box 1. Principles 1-4 cover public access to fiscal information, while principles 5-10 concern the governance of fiscal policy.

Box 1: The GIFT High-Level Principles on Fiscal Transparency, Participation and Accountability  [5]

Principle 1: Everyone has the right to seek, receive and impart information on fiscal policies. To help guarantee this right, national legal systems should establish a clear presumption in favor of the public availability of fiscal information without discrimination. Exceptions should be limited in nature, clearly set out in the legal framework, and subject to challenge through low-cost, independent and timely review mechanisms.

Principle 2: Governments should publish clear and measurable objectives for aggregate fiscal policy, regularly report progress against them, and explain deviations from plans.

Principle 3: The public should be presented with high quality financial and non-financial information on past, present, and forecast fiscal activities, performance, fiscal risks, and public assets and liabilities. The presentation of fiscal information in budgets, fiscal reports, financial statements, and National Accounts should be an obligation of government, meet internationally-recognized standards, and should be consistent across the different types of reports or include an explanation and reconciliation of differences. Assurances are required of the integrity of fiscal data and information.

Principle 4: Governments should communicate the objectives they are pursuing and the outputs they are producing with the resources entrusted to them, and endeavor to assess and disclose the anticipated and actual social, economic and environmental outcomes.

Principle 5: All financial transactions of the public sector should have their basis in law. Laws, regulations and administrative procedures regulating public financial management should be available to the public, and their implementation should be subject to independent review.

Principle 6: The Government sector should be clearly defined and identified for the purposes of reporting, transparency, and accountability, and government financial relationships with the private sector should be disclosed, conducted in an open manner, and follow clear rules and procedures.

Principle 7: Roles and responsibilities for raising revenues, incurring liabilities, consuming resources, investing, and managing public resources should be clearly assigned in legislation between the three branches of government (the legislature, the executive and the judiciary), between national and each sub-national level of government, between the government sector and the rest of the public sector, and within the government sector itself.

Principle 8: The authority to raise taxes and incur expenditure on behalf of the public should be vested in the legislature. No government revenue should be raised or expenditure incurred or committed without the approval of the legislature through the budget or other legislation. The legislature should be provided with the authority, resources, and information required to effectively hold the executive to account for the use of public resources.

Principle 9: The Supreme Audit Institution should have statutory independence from the executive, and the mandate, access to information, and appropriate resources to audit and report publicly on the raising and commitment of public funds. It should operate in an independent, accountable and transparent manner.

Principle 10: Citizens should have the right and they, and all non-state actors, should have effective opportunities to participate directly in public debate and discussion over the design and implementation of fiscal policies.

The Principles are at a level of generality that can be applied across all countries, irrespective of constitutional arrangements, type or structure of government, variety of organisational arrangements and relationships, or level of development or capacity. They focus on functions rather than prescribing specific institutional forms. The standards, norms and assessment instruments above which the Principles sit are where graduated approaches are increasingly being developed to recognize diversity in country circumstances.

The High-Level Principles were the subject of a United Nations General Assembly Resolution in December 2012, sponsored by GIFT’s founding Lead Stewards: the Governments of Brazil and the Philippines, the International Monetary Fund, the World Bank, and the International Budget Partnership. UNGA Resolution 67/218 endorsed the GIFT Principles of fiscal transparency, participation and accountability and encouraged efforts by states and the UN system to help build state capacity for fiscal openness.

Box 2 contains the text of the Resolution, which represents an important endorsement by the international community of the GIFT Principles and of the intensified efforts to increase the development impacts of government taxation and spending.[6]

Box 2: UNGA Resolution 67/218: Promoting transparency, participation and accountability in fiscal policies

The General Assembly,
Recalling its resolution 66/209 of 22 December 2011 and its previous resolutions on public administration and development,
Recalling also the United Nations Millennium Declaration,
Acknowledging that fiscal policies have a critical impact on economic, social and environmental outcomes in all countries at all levels of development,
Emphasizing the need to improve the quality, efficiency and effectiveness of fiscal policies,
Recognizing the critical role that transparency, participation and accountability in fiscal policies can play in pursuit of financial stability, poverty reduction, equitable economic growth and the achievement of sustainable development,
Recognizing also that transparency, participation and accountability in fiscal policies should be promoted in a manner that is consistent with diverse country circumstances and national legislation,
1. Takes note of the Global Initiative for Fiscal Transparency and its High-level Principles on Fiscal Transparency, Participation and Accountability of 2012;
2. Encourages Member States to intensify efforts to enhance transparency, participation and accountability in fiscal policies, including through the consideration of the principles set out by the Initiative, on a voluntary basis;
3. Also encourages Member States, in this regard, to promote discussions on advancing the common goal of transparent, participatory and accountable management of fiscal policies;
4. Invites Member States and relevant United Nations institutions to promote cooperation and information-sharing among all stakeholders to assist Member States in building capacity and exchanging experiences with regard to transparency, participation and accountability in fiscal policies.

As indicated in the Introduction, the High-Level Principles were intended to promote increased convergence and coherence across the large number of international fiscal transparency instruments. They were also intended to help identify gaps in standards and norms, and to promote the development of new or enhanced instruments as necessary.

To that extent the High-Level Principles were viewed as sitting at the top of a hierarchy of principles, standards and norms (the second level) and assessments of country practices (the third level) – as illustrated in Figure 2.

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Figure 2: The Hierarchy of Fiscal Transparency Principles, Standards and Assessments

An illustration of how the High-Level Principles have impacted on standards and norms is through considering High-Level Principle 10 on public participation. As noted in the Introduction, a right to direct public participation in fiscal policy design and implementation had not previously been asserted in an international fiscal transparency instrument. There was a lack of guidance on what the principle meant in practice, although the International Budget Partnership led the way when it introduced a section on public participation practices in the 2012 Open Budget Survey.

In 2012 GIFT therefore embarked on a multi-year work program to generate greater knowledge about country practices and innovations in citizen engagement. Outputs produced include country case studies, a set of GIFT Principles of Public Participation in Fiscal Policy, a Guide on Public Participation in Fiscal Policy, and instruments to measure public participation in fiscal policy (see the discussion under High-Level Principle 10 for further details).

Since 2012, elements of public participation have been incorporated in the leading international fiscal transparency instruments: by the IMF, the OECD, the Open Budget Survey (Section 5 of which was redesigned in 2017 to measure performance against the GIFT Participation Principles), the Public Expenditure and Accountability initiative (PEFA), and the new Tax Administration Diagnostic Assessment Tool (TADAT).

More generally, since 2012 the GIFT coordination team has reviewed the consultation drafts of the revised and new fiscal transparency standards as they were being developed, against the High-Level Principles. The objective has been to promote greater coherence across all the instruments, and to achieve a better reflection of the High-Level Principles e.g. with respect to public participation but also in other respects. Examples include GIFT comments on the draft IMF Fiscal Transparency Code, (including the separate draft of Pillar IV of the Code on Resource Revenue Transparency), on the draft OECD Principles of Budgetary Governance, on the draft participation section of the Open Budget Survey, and on the draft of the revised PEFA.

The independent evaluation of GIFT in 2016 undertook a detailed analysis of the influence of  GIFT and the High-Level Principles on the revisions to the main fiscal transparency standards and instruments that took place in the period 2013-2016. The evaluation concluded that ‘GIFT has been highly successful in its work to harmonize norms and standards regarding fiscal transparency and public participation.’[7]

GIFT has also mapped  the fiscal transparency commitments made by members of the Open Government Partnership to help identify patterns, promising areas of reform, and areas that might be given more emphasis, and to compare implementation progress across countries. The GIFT coordination team has used the High-Level Principles when reviewing draft OGP National Action Plans and in providing suggestions on how the draft Plans could be strengthened or on commitments to consider for future plans.[8]

Looking ahead, GIFT Stewards have used the High-Level Principles to frame their thinking in formulating the 2018-2021 GIFT Strategic Plan. In this period GIFT will focus on placing the citizen at the centre of fiscal transparency efforts. This will involve supporting citizen efforts to monitor how their taxes are collected and how public money is being spent, and to have a say in the design and implementation of tax and spending policies.

A specific goal is to better link budget information with areas that more directly affect people’s lives. The challenge is that current global standards and norms fall short on encouraging and guiding the publication of detailed and meaningful spending information that public service users and local communities need. In public service delivery, one of the missing links between transparency and participation is granularity: the disclosure of facility-level and transaction-level information. Currently, there is no international norm on the level of detail required for routine disaggregated reporting on the administrative classification of budget information that would make it possible for citizens to see how individual service delivery units – such as schools or health centers – allocate and spend their budgets.  We are also talking here about better disclosure practices in terms of reusable data formats, improved quality of online portals/websites, and the ability to cross-reference different types of data.

These activities will help to strengthen implementation of High-Level Principles 3 (publication of high quality fiscal data), 4 (transparency of outputs and of resources entrusted to governments), and 10 (public participation).

In the future, GIFT will address these gaps in an effort to promote budgets, fiscal reports and other documents that are more understandable, readable and detailed. Routine disclosure of the budgets of individual service delivery units could also support much more direct engagement between service users and local communities, on one hand, and the managers of service delivery units. Research to better understand the gap between the information supplied and the users’ needs will be part of this effort. Framed under these considerations, GIFT will continue the work on the disclosure of useful information for citizens, such as procurement, and public service delivery data, following examples and models on granularity that GIFT government stewards and partners are required to report on their budgets at the national level.

Similarly, more attention will be paid to direct public engagement over the design and implementation of revenue policies. From its inception, GIFT has defined fiscal transparency as a broader concept than budget transparency. On the revenue side, this basically refers to the right to participate in debates over revenue policies and address publicly and informatively the degree to which tax burdens are progressive and fair.

GIFT will facilitate a conversation between the increasing number of stewards and partners that have been working on tax policies and tax administration issues from different perspectives, in a dialogue that could help identify gaps and complementarities between the different approaches, emphasizing access to information concerning government revenues and direct public engagement, in order to conduct relevant analysis, and addressing the question of inequality.

In sum, the GIFT network will be focusing in the areas that will frame the debate and lead the reforms on transparency in the future: the disclosure of quality fiscal information in formats and ways that are meaningful to the users; the right to public participation in fiscal policies, particularly the design and delivery of public services; and public engagement in the processes through which tax and budget policies reflect public priorities and solve the problems that matter to people.

[1] “Understanding of governments’ underlying fiscal position and the risks to that position remains inadequate. This was demonstrated by the emergence of previously unreported fiscal deficits and debts and the crystallization of large, mainly implicit, government liabilities to the financial sector during the current crisis…A revitalized fiscal transparency effort is needed to address the shortcomings in standards and practices revealed by the crisis and guard against a resurgence of fiscal opacity in the face of growing pressures on government finances’ ‘Fiscal Transparency, Accountability, and Risk’, IMF, August 7, 2012.

[2] Open Budget Survey 2012, http://www.internationalbudget.org/wp-content/uploads/OBI2012-Report-English.pdf

[3] GIFTs founding Lead Stewards were the International Monetary Fund, the World Bank, the International Budget Partnership, the Federal Secretary of Budget and Planning of Brazil and the Department of Budget and Management of the Philippines. The International Federation of Accountants, and the Ministry of Finance and Public Credit of Mexico, have since been admitted as Lead Stewards. There is a wider group of Stewards, numbering 37 as at January 2018, including 13 budget-related government institutions, 12 national or regional CSOs, 5 international CSOs, 3 multilateral organisations, 3 private foundations, and 1 international development institution.   See http://www.fiscaltransparency.net/about/

[4] Defining the Technical Content of Global Norms: Synthesis and Analytic Review: Phase I and Phase II Reports, December 2011. Available at www.fiscaltransparency.net

[5] The Principles, together with the accompanying preamble, are reproduced in Annex 1. They are also available at http://www.fiscaltransparency.net/ft_principles/#toggle-id-1

[6] The Resolution is also available at http://www.un.org/ga/search/view_doc.asp?symbol=A/RES/67/218

[7] Swedish Development Advisers (2016), Independent Evaluation of the Global Initiative for Fiscal Transparency (2013-2016).’ Gothenburg, November 29.

[8] http://www.fiscaltransparency.net/fowg/

III. Mapping of current international fiscal transparency instruments

Figure 3 presents a stylized mapping of international fiscal transparency instruments. The aim is to provide a quick overview of all the current instruments and their key features, as well as to provide direct access to the individual web sites for further information.

Figure 3 is organized in three categories according to whether instruments provide for:

  • Disclosure of fiscal information
  • Public participation in fiscal policy, or
  • Oversight of fiscal policy.

These three domains relate to the three key parameters for GIFT as expressed in the High-Level Principles: transparency, participation, and accountability.

Sub-categories of the three domains provide additional information about the nature of instruments, while the zones of intersection between the three domains show instruments that cover two of the three domains, or all three domains.

Figure 3: Mapping current international fiscal transparency instruments

img_03Download the PDF for a better visualization!!! 

Table 1 narrows down the focus considerably to provide a summary of key elements of just the core international fiscal transparency instruments.

The aim of Table 1 is to assist those in government or other public institutions, or in civil society or international organisations, to decide which of the core standards and assessment instruments might be most appropriate to their circumstances, how to initiate activity, and what the scope and other features of these instruments are.

Table 1: Key elements of the core international fiscal transparency instruments

tabla

IV. Guide to the individual GIFT High-Level Principles

Access to Fiscal Information

High-Level Principle One

Everyone has the right to seek, receive and impart information on fiscal policies. To help guarantee this right, national legal systems should establish a clear presumption in favour of the public availability of fiscal information without discrimination. Exceptions should be limited in nature, clearly set out in the legal framework, and subject to effective challenge through low-cost, independent and timely review mechanisms.

Why this is important
Access to information is a precondition for the public to be able to take informed decisions regarding basic needs, safety, access to public services and other crucial factors related to wellbeing. It is also crucial for citizens to be able to access information about the public affairs that concern them, and for the public to hold officials and the government as a whole to account for fiscal management. In addition, access to information is a precondition for meaningful public participation in fiscal policy. The right to fiscal information is an important guarantor of the ability of the public to obtain information in practice.

The right to government information is enshrined in laws in over 110 countries. The Universal Declaration of Human Rights states that government-produced information belongs to the general public and must be accessible by anyone who requests it, unless it needs to be classified for reasons of public interest (national security, ongoing investigations processes, privacy, etc.), and there is a legal basis for this classification.

There are limits to the right to fiscal information. The most significant ones are related to the privacy of individuals. If transparency is important for democracy, protection of privacy is crucial for individual liberty and the freedom of thought. The balance between transparency and privacy protection is a complicated matter. In most countries, it is a result of a public debate and a legislative definition that establishes the tradeoff between privacy and publicity on the use of public resources. For instance, the economic compensation of public servants can be public information, but how much such individuals pay in taxes may be protected by confidentiality (although in one or two countries this also is public e.g. Sweden). In another example, while the names of beneficiaries of direct cash transfers are disclosed in Mexico and Brazil, the beneficiaries of similar subsidies have their names concealed in Spain or Germany. In one place, the public interest favors the disclosure of the names of all public resource beneficiaries, while personal data protection prevails as the value that must be protected in other places. In any case, it is important that these limits are clearly set out in the legal framework, to avoid as much as possible discretion in the interpretation and enforcement of the law.

The origins of the right to information principle
The right of citizens to fiscal information is at least as old as the French declaration of the rights of man and citizen, 1789, which stated: ‘All citizens have the right to ascertain, personally or through their representatives, the necessity of the public tax, to consent to it freely, to know how it is spent, and to determine its amount, basis, mode of collection, and duration.’ (Article 14).[1]

Article 19 of the Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights (ICCPR) states that everyone has the right to freedom of expression, including the freedom to seek, receive and impart information and ideas of all kinds. This includes all individuals within a state and subject to its jurisdiction, not just citizens. Similar language appears in Article 17 of the African (Banju) Charter on Human and Peoples’ Rights and in other regional conventions, such as Article 13 of the American Convention. The Human Rights Committee, which interprets the ICCPR, in September 2011 clarified that the Convention establishes a right to public access to information held by public agencies.

Article 19 applies to all branches of the State (executive, legislative and judicial) and other public or governmental authorities, at whatever level – national, regional or local.  Such responsibility may also be incurred by a State party under some circumstances in respect of acts of semi-State entities.[2]

Article 19 states that this right may be subject to certain restrictions, but these shall only be such as are provided by law and are necessary: (a) For respect of the rights or reputations of others; (b) For the protection of national security or of public order, or of public health or morals.

The ICCPR has been in force since 1976, and as of October 2011 had 74 signatories and 167 parties. It has the force of international treaty law.

The Rio Declaration on Environment and Development, 1992, in Principle 10, states that, at the national level, each individual shall have appropriate access to information concerning the environment that is held by public authorities…States shall facilitate and encourage public awareness and participation by making information widely available. Effective access to judicial and administrative proceedings, including redress and remedy, shall be provided.

The UNECE Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (the Aarhus Convention) sets out a rights-based approach to access to environmental information, public participation, and binding independent review of decisions on access to environmental information and decisions.

The Inter-Parliamentary Union’s Universal Declaration on Democracy (1997) stipulates that accountability entails a public right of access to information about the activities of government, the right to petition government and to seek redress through impartial administrative and judicial mechanisms.

One of the Open Government Partnership’s eligibility criteria is the right to access to information, as it requires member countries to have a law on access to information law, right to information as a constitutional provision, or a draft initiative under consideration. On access to fiscal information, the OGP requirements also demand the timely publication of essential budget documents, such as the budget proposal and the audit report.

The members of the Organization of American States declared in 2009 that “access to information held by the State, subject to constitutional and legal norms, including those on privacy and confidentiality, is an indispensable condition for citizen participation and promotes effective respect for human rights.” After that, the OAS member States, agreed on a preparation of a Model Inter-American Law on Access to Information to provide States with the legal foundation necessary to guarantee the right to access to information, as well as an Implementation Guide for the Model Law to provide the roadmap necessary to ensure the Law functions in practice (http://www.oas.org/en/sla/dil/access_to_information_model_law.asp). In June 2010, the OAS General Assembly adopted resolution AG/RES 2607 (XL-O/10) (http://www.oas.org/en/sla/dil/docs/AG-RES_2514-2009_eng.pdf) on the Model Law. The Model Inter-American Law and the Guide for its Implementation, incorporate the principles outlined by the Inter-American Court on Human Rights in Claude Reyes v. Chile, as well as the Principles on Access to Information adopted by the Inter-American Juridical Committee. [CJI/RES. 147 (LXXIII-O/08)]. Similarly, the African Union approved a model law for Africa in 2012 (http://www.achpr.org/instruments/access-information).

One important characteristic of these more recent model laws is that they take into consideration the era of internet and new technologies, with the possibility to disclose significant amounts on government information on line. These legislative pieces support the proactive disclosure of government information that is supposed to be very useful for citizens or frequently requested. Among the key classes of information subject to proactive disclosure by a public authority is the description of its organizational structure, functions, duties, locations of its departments and agencies, operating hours, and names its officials; the qualifications and salaries of senior officials; the internal and external oversight, reporting and monitoring mechanisms relevant to the public authority including its strategic plans, corporate governance codes and key performance indicators, including any audit reports; and its budget and its expenditure plans for the current fiscal year, and past years, and any annual reports on the manner in which the budget is executed.

This important feature of access to information laws is less common in legislations approved before the year 2000.
A right to fiscal information is also suggested by the reciprocal relationship between citizens and government, in which citizens provide resources to and entrust governments with stewardship over public resources, and, in turn, expect to have access to fiscal information.

How is this Principle reflected in existing international norms and standards?
General freedom of information laws apply in over 111 countries (see the Global Right to Information Rating, by the Centre for Law and Democracy). However, a right to fiscal information has not previously been included in an international instrument on fiscal transparency.

There are two ways to access government information: governments can proactively disclose it, or they can provide access in response to an official information request. A key aspect of the right to information is the rules on the proactive disclosure of information. Fiscal transparency holds a central role in access to information legal regulations, for two reasons: the public nature of budget resources, originated in the taxes paid by the people, and the fact that the sections on proactive disclosure of these laws usually devote special attention to the obligation to publish information about the budget and fiscal resources, without the need of having requests for such information.

That said, although fiscal transparency is a central part of proactive disclosure provisions in many countries, disclosure rules are often spread among many different pieces of legislation, such as procurement laws, public investment, public works and infrastructure regulations, decentralization provisions and budget responsibility laws, which frequently include specific stipulations on proactive disclose of fiscal activities and public funds.

The right of access to fiscal information is strongly present in the 2015 restructured version of the International Monetary Fund Fiscal Transparency Code. The Code is composed of 36 principles in total and 17 of them are related to proactive fiscal transparency proactive disclosure. In all pillars of the FT-Code, various principles indicate that information should be proactively disclosed to the public: six principles related to fiscal reporting (tax expenditures, in-year fiscal reports, financial statements, revisions to historical statistics, fiscal statistics and annual financial statements) , four principles on the fiscal forecasting and budgeting chapter (financial obligations under investments projects, budget documents, objectives and results, implications of budget policies), and seven principles of the fiscal risks’ analysis forecasting and management pillar (main specific risks, guarantee exposure, obligations under public-private-partnerships, fiscal exposure of the financial sector, exploitation of natural resources, exposure to natural disasters, financial condition of subnational governments).

The Organization for Economic Cooperation and Development published in 2002 the Best Practices for Budget Transparency, which define budget transparency as “the full disclosure of all relevant fiscal information in a timely and systematic manner”, and outlines “specific disclosures”, that is various types of information (such as economic assumptions, financial assets and liabilities, and contingent liabilities) which should be included in budget reports. In 2015, the OECD Recommendation of the Council on Budgetary Governance set out ten Budget Principles, presenting an overview of how various aspects of budgeting should inter-connect to form a coherent and effective system. The Principles supplement many elements of the Best Practices, including the principle of transparency, openness and accessibility and by introducing a principle of participative and inclusive budgetary debate.

Finally, the OECD published in 2017 the Budget Transparency Toolkit, which include a section devoted to providing useful budget related documents during the annual cycle and including the right financial information in budget related documents. On publication of budget documents, the OECD recommends that official documents should provide a useful overview of the fiscal activities of the public sector in a regular and timely manner, to inform better scrutiny and decision-making throughout the budget cycle.

The new PEFA framework of 2016 clearly addresses in many of its indicators the questions of public access to public finance information and, in a some of them, the issue of the quality of information. PEFA emphasizes transparency and accountability in terms of access to information, reporting and audit, and dialogue on PFM policies and actions. In 14 of the 31 indicators, the question of the publication of Public Financial Management documents is introduced and consistently, the transparency question is related to better practices. This means that the new PEFA framework provides a very valuable source of information related to fiscal transparency. Pillar 2 on transparency of public finances, Pillar 3 on management of assets and liabilities, Pillar 4 on policy-based fiscal strategy and budgeting, Pillar 6 on accounting and reporting and Pillar 7 on external scrutiny and audit, all include the importance of pro-actively disclosed information in some of their dimensions.

In sum, the new IMF-Code, PEFA assessment and the OECD toolkit provide a valuable analysis of the fiscal transparency of PFM systems.
The International Budget Partnership’s Open Budget Survey (OBS) 2015 is completely about the right to fiscal information: this is a comprehensive analysis and survey that evaluates whether governments give the public access to budget information and opportunities to participate in the budget process at the national level. The IBP works with civil society partners in 102 countries to collect the data for the Survey. The first Open Budget Survey was released in 2006 and will be conducted biennially. The OBS edition 2015 asks whether citizens have the right in law to access government information including budget information. General question 3 addresses specifically this point. The focus on public access to information, as well as opportunities to participate in budget processes, is what makes the questionnaire unique among assessments of government transparency and accountability.

The Inter-Parliamentary Union’s Parliament And Democracy In The Twenty-First Century: A Guide to Good Practice stipulates that the legislature should operate transparently, including proceedings being open to the public; prior public information on the business before parliament; documentation available in relevant languages; availability of user-friendly tools; and legislation on freedom of/access to information.

Country Practices
An index of the quality of the legal environment for general Freedom of Information laws in 111 countries, based on 61 indicators, is available at http://www.rti-rating.org/country-data/ The 61 indicators are in seven categories: right of access; scope; requesting procedures; exceptions and refusals; appeals; sanctions and protections; and promotional measures. The findings show a significant variation in the quality of the legal framework, with scores ranging from 33 (Austria) to 136 (Mexico) out of a maximum of 150. More recent laws protect the right to know more strongly; of the 20 countries with scores above 100, twelve adopted their laws since 2005.

A growing number of countries have established an Ombudsman/Office of Public Protector/Information Commissioner with authority to investigate individual public complaints about denial of access to official information.  Sweden is the country with the longest tradition of an independent Ombudsman.

Access Information Europe and the Centre for Law and Democracy, in collaboration with the International Budget Partnership, coordinated an initiative in 2010-11 to monitor the right of access to budget information in practice – the Ask Your Government! 6 Question Campaign.  A network of civil society organisations submitted 480 requests for budget information in 80 countries. In response to over half of the requests, no information at all was provided – in spite of the fact that requesters made multiple resubmissions of the questions and made other efforts to elicit a response. Only 12 countries complied with Right To Information standards.

An IBP Research Note investigated the prevalence of legislation requiring fiscal transparency, and public participation in the budget process. [3] About half of the 125 countries surveyed incorporated some mention of budget transparency in their laws. 14 countries provide very extensive coverage of budget transparency matters in their legislation. However, the inclusion of detailed transparency clauses in budget laws does not necessarily result in better practice; just as the lack of such laws or provisions does not inhibit good practice.

The Open Budget Survey 2015[4] found:

  • In 89 out of 102 countries do citizens have the right in law, and generally in practice, to access government information including budget information. The most common rating was ‘d’ (30 countries) where either the right to information including budget information is not codified, or it is frequently or always impossible in practice to obtain access.

Sources of further technical guidance
The GIFT Phase 2 Report for the Advancing Global Norms Working Group, Defining the Technical Content of Global Norms: Towards a New Global Architecture, 2 December 2011 (Appendix 1 and Appendix 2), contains a summary of Official International Instruments, and Civil Society International Instruments that contain provisions on citizens’ right to information:  http://fiscaltransparency.net/

The UN Human Rights Committee has published an explanatory note on Article 19:
Human Rights Committee, 102nd session, Geneva, 11-29 July 2011. General comment No. 34, Article 19: Freedoms of opinion and expression.

The Inter-Parliamentary Union’s Parliament And Democracy In The Twenty-First Century: A Guide to Good Practice (Chapter 3): http://www.ipu.org/dem-e/guide.htm

The IMF Fiscal Transparency Manual 2007 (pp. 85-90) on commitment to the publication of fiscal information:  http://www.imf.org/external/ns/search.aspx?NewQuery=fiscal+transparency+manual&col=&submit.x=0&submit.y=0

The IMF’s Special Data Dissemination Standard: http://dsbb.imf.org/Pages/SDDS/Overview.aspx

Transparency and Participation in Public Financial Management: What Do Budget Laws Say? Paolo de Renzio, International Budget Partnership, Verena Kroth, London School of Economics. IBP research Note Number 1, September 2011.

[1] See Irwin, T, 2013, Shining a Light on the Mysteries of State: The Origins of Fiscal Transparency in Western Europe, IMF Working Paper WP/13/219.

[2] Human Rights Committee, 102nd session, Geneva, 11-29 July 2011. General comment No. 34, Article 19: Freedoms of opinion and expression, paragraph 7.

[3] de Renzio and Kroth, 2011.

[4] Results from the 2017 OBS were not available at time of completion of this Guide.

The Governance of Fiscal Policy

High-Level Principle Five

All financial transactions of the public sector should have their basis in law. Laws, regulations and administrative procedures regulating public financial management should be available to the public, and their implementation should be subject to independent review.

Why this is important
The ‘rule of law’ is as fundamental to management of the public finances as it is to all dimensions of governance. All financial transactions should adhere to a publicly available legal framework, rather than the discretion of government officials

What is the public sector?
The public sector is defined here as in the UN System of National Accounts and described with respect to fiscal policy in the IMF Government Financial Statistics Manual 2014. It includes all entities that are either owned or controlled by government, and comprises the general government – central government and state and local governments – and nonfinancial and financial public corporations (including the central bank).

The GIFT Principles cover both fiscal policy implemented by government institutions (the government sector), and transparency of all publicly-owned and controlled assets and liabilities (i.e. the assets and liabilities of the whole public sector).

What does independent review mean?
Independent review includes a range of mechanisms for subjecting decisions on the implementation of fiscal policies to a review by persons independent of the original decision maker. This ranges from review within the agency concerned; to advisory review by a complaints body such as an ombudsman; to auditing of financial transactions and procedures by the Supreme Auditing Institution (covered in HLP 9); to low-cost review by an administrative tribunal (e.g. a tax tribunal or a social security tribunal); and ultimately to judicial review by the courts.

How is this Principle reflected in existing international norms and standards?
The IMF Fiscal Transparency Code focuses on the legal framework determining the powers and responsibilities of the executive and legislature in the budget process (Principles 2.2.1, 2.4.2 and 3.2.1), and also covers clarity of the legal framework for borrowing and for significant asset acquisitions and disposals (principle 3.2.2). It has limited coverage of laws, regulations and procedures governing other elements of public financial management such as the use of public funds, collection of revenue, or asset management. For resource-rich economies, however, Pillar IV[1] of the Code notes specifically that the fiscal regime for revenue generation should be clear, comprehensive, and governed by law (Draft Principle 4.1.2). Pillar IV also calls for open and transparent procedures for granting rights for resource extraction (Draft Principle 4.2.1).

The PEFA performance measurement framework assesses specific aspects of the legal basis for financial transactions in the public sector:

  • PEFA Indicator PI-7.1 assesses what proportion of horizontal transfers (unconditional or conditional) to subnational governments from central government are determined by transparent and rules-based systems.
  • PI-13.2 measures the coverage of primary legislation and documented procedures on borrowing, debt issues and loan guarantees; a top score on this indicator implies that a single debt management entity is responsible for all debt issues and that annual borrowing is approved by the government or legislature.
  • PI-17.1 covers the government’s budget calendar.
  • PI-18 covers the legislature’s scrutiny and approval of the annual budget.
  • PI-19 to PI-26 cover standards, process and internal controls for budget execution e.g. PI-19.1 assesses taxpayer access to details of obligation and redress procedures; while PI-3. assesses public access to information on procurement including its legal and regulatory framework; PI-24.4 looks at procurement complaints management; and PI-26 assesses internal audit processes.
  • PI 29.2 measures the timeliness of submission of financial reports for external audit; and PI-30 and PI-31 assess the audit process itself, including scrutiny by the legislature, follow-up, and independence of the Supreme Auditing Institution.

The Tax Administration Diagnostic Assessment Tool (TADAT) contains two performance indicators directly related to the rule of law. Indicator P3-7 assesses the range, accuracy and accessibility of information available to taxpayers explaining what their obligations and entitlements are in respect of each core tax. Indicator P7-19 assesses the existence and effectiveness of an independent and graduated dispute resolution process.

The Open Budget Survey (OBS 2015)[2] covers several aspects of the legislature’s role in approving the executive’s budget proposals:

  • Questions 106-108 ask about the timing of the legislature’s input and whether it has power to amend budget proposals.
  • Questions 109-111 ask about the legislature’s input into the executive’s decisions subsequent to the budget’s approval to spend contingency funds or excess revenue; or to shift funds within and between administrative units.

Principle A of the IFAC/CIPFA Principles of Good Governance in the Public Sector requires ‘behaving with integrity, demonstrating strong ethical values, and respecting the rule of law’.

The multi-stakeholder Extractive Industries Transparency Initiative (EITI) promotes standards for countries with large natural resource sectors including on the legal and institutional framework for extraction activity, and revenue.

Article 9 of the UN Convention Against Corruption identifies measures to establish transparent procurement and public finance management systems. A Technical Guide promotes implementation of the convention by state parties.

The G20 Anti-Corruption Action Plan 2017-18, noting that ‘transparency is key to deterring and uncovering corruption’, pledges G20 countries to promote greater transparency in the public sector, including in public contracting, budget processes and customs. It draws on the G20 Anti-Corruption Open Data Principles (2014). At the request of the G-20 Anti-Corruption Working Group, the OECD developed a Compendium of Good Practices for Integrity in Public Procurement (2015).

The Arusha Declaration of the World Customs Organisation stipulates that customs laws, regulations, procedures and administrative guidelines should be made public, be easily accessible and applied in a uniform and consistent manner; and that appeal and administrative review mechanisms should be established to provide a mechanism for clients to challenge or seek review of Customs decisions.

Country Practices
South Africa’s legal framework for public financial management – the Public Financial Management Act 1999 – is generally regarded as a high quality and comprehensive example of a modern budget law.

Korea’s legal framework for taxation, including independent review mechanisms, was described in the 2001 IMF Fiscal ROSC as being comprehensive. https://www.imf.org/external/np/rosc/kor/fiscal.htm

The OECD Working Party of Senior Budget Officials undertakes country reviews of budgeting systems, published in the OECD Journal of Budgeting, that provide comprehensive overviews of their budget processes. https://www.oecd.org/gov/budgeting/oecdjournalonbudgeting.htm

Individual country fiscal ROSCs (published assessments of fiscal transparency in individual countries against the IMF Code of Good Practices in Fiscal Transparency (1998 and 2007)) are available at: https://www.imf.org/external/NP/rosc/rosc.aspx?sortBy=Topic&sortVal=Fiscal%20Transparency The 1998 and 2007  versions of the IMF Code covered explicitly the need for a comprehensive legal framework for fiscal management.

Published PEFA assessment reports on individual countries are available at http://www.pefa.org/

Sources of further technical guidance
IMF Fiscal Transparency Code
https://www.imf.org/external/np/exr/consult/2016/ftc/pdf/050916.pdf

IMF Fiscal Transparency Manual 2007 (particularly pp 21-27 on legal frameworks and review mechanisms):  http://www.imf.org/external/ns/search.aspx?NewQuery=fiscal+transparency+manual&col=&submit.x=0&submit.y=0

IMF Guide on Resource Revenue Management 2007 (particularly pp. 34-36): http://www.imf.org/external/np/fad/trans/guide.htm

Public Expenditure and Financial Accountability (PEFA) Framework for Assessing Public Financial Management, 2016: https://pefa.org/content/pefa-framework

IFAC/CIPFA 2014. International Framework: Good Governance in the Public Sector.  http://www.cipfa.org/policy-and-guidance/standards/international-framework-good-governance-in-the-public-sector

The International Organization of Supreme Audit Institutions (INTOSAI) Guidance for Internal Control Standards for the Public Sector: http://www.intosai.org/issai-executive-summaries/view/article/intosai-gov-9100-guidelines-for-internal-control-standards-for-the-public-sector.html

UN System of National Accounts: https://unstats.un.org/unsd/statcom/doc08/sna-chapter4.pdf

IMF Government Finance Statistics Manual 2014:  https://www.imf.org/external/Pubs/FT/GFS/Manual/2014/gfsfinal.pdf

IMF Technical Notes and Manuals 2010 Reforming Budget System Laws http://blog-pfm.imf.org/files/fad-technical-manual-8.pdf

UN Convention Against Corruption (Technical Guide): (https://www.unodc.org/unodc/en/treaties/CAC/technical-guide.html)

G20 Anti-Corruption Open Data Principles (2014).

http://www.g20.utoronto.ca/2015/G20-Anti-Corruption-Open-Data-Principles.pdf

G20 Anti-Corruption Action Plan 2017-18.

https://www.oecd.org/g20/topics/anti-corruption/G20_Anti-Corruption_Action_Plan.pdf

OECD Compendium of Good Practices for Integrity in Public Procurement (2015) https://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=GOV/PGC/ETH(2014)2/REV1&docLanguage=En

Arusha Declaration on Good Governance and Integrity in Customs: http://www.wcoomd.org/~/media/wco/public/global/pdf/about-us/legal-instruments/declarations/revised_arusha_declaration_en.pdf?la=en

Lienert, Ian, 2013, The Legal Framework for Public Finances and Budget Systems. In The International Handbook of Public Financial Management, ed. R. Allen, R. Hemming, B. Potter, chapter 3.

Paolo de Renzio and Verena Kroth, Transparency and Participation in Public Financial Management: What Do Budget Laws Say? International Budget Partnership IBP research Note Number 1, October 2011. http://www.internationalbudget.org/publications/ibp-research-note-no-1-transparency-and-participation-in-public-financial-management-what-do-budget-laws-say-2/

[1] The draft IMF Natural Resource Fiscal Transparency Code (May 9, 2016) can be accessed at:

https://www.imf.org/external/np/exr/consult/2016/ftc/pdf/050916.pdf

[2] Results from the 2017 OBS were not available at time of completion of this Guide.

Glossary of terms

Accountability: an obligation to report, explain and be answerable for resulting consequences. In the public sector, there is a hierarchy of accountability relationships. Unelected public officials are generally accountable to elected political decision makers, who are in turn accountable to legislatures, and ultimately to citizens.

 

Accounting basis: the body of accounting principles that determines when the effects of transactions or events should be recognized for financial reporting purposes. The International Federation of Accountants (IFAC) identifies two basic reference points (cash and accrual).

Accrual accounting: Accrual accounting systems recognize transactions or events at the time economic value is created, transformed, exchanged, transferred, or extinguished, and all economic flows (not just cash) are recorded.

Aggregate fiscal policy: the level of fiscal policy that influences the economy at large. Its main dimensions are overall government revenues and spending, the fiscal deficit, and public debt.

Assets: Any economic resource controlled by an entity as a result of past transactions or events and from which future economic benefits may be obtained, including both. financial assets (cash, deposits, equities etc.) and nonfinancial assets (buildings, equipment, inventories etc.).

Balance sheet: a comprehensive and consolidated statement of assets, liabilities, and net worth of the government or the public sector at the end of the accounting period. This includes financial and nonfinancial, and domestic and external assets and liabilities, as well as further information relating to them.

Budget: statement of how a government proposes to raise revenues, spend resources, and finance its operations in the coming year. A supplementary budget is sometimes authorized during the budget year if the annual budget appropriation proves insufficient.

 

Budget calendar: a calendar indicating the key dates in the process of preparing and approving the budget, including the internal calendar for line ministries to prepare their budget proposals, the date the executive budget is submitted to the legislature, legislative review including dates for budget hearings, and the date the budget appropriations bill should be passed by the legislature.

Budget documentation: the annual budget presentation and the budget-supporting documents, such as discussion of macroeconomic performance and outlook, new policy initiatives, recent data on revenues, expenditures, and debt, and discussion of fiscal risks.

Budget sector: that part of the central government sector that is incorporated in the annual budget (budgetary central government). Coverage of the budget sector varies across countries, from all of central government, to narrower coverage that may exclude entities such as extra-budgetary funds, social security funds, or other autonomous public agencies.

 

Budget transparency: publication of full information across the complete budget cycle, from a pre-budget statement, through the proposed and approved budgets, in-year and annual fiscal outturn reports, and audit reports.

 

Cash accounting: cash accounting systems recognize transactions and events when cash is received or paid.

 

Central government: all government units that are agencies or instruments of the central authority of a country and that are covered by or financed through the budget or extra-budgetary funds at that level.

Contingent liabilities: payment obligations whose timing and amount are contingent on the occurrence of a particular discrete/uncertain future event or series of future events. Examples include loan guarantees, and minimum revenue guarantees in PPP contracts. May also refer to ‘implicit contingent liabilities’ where there is no formal obligation but likely pressure for government to provide fiscal support e.g. following a disaster.

Disclosure: the publication of information.

Extra-budgetary activities: generally, government transactions that are not included in the annual budget presentation. A wide variety of extra-budgetary arrangements are used, including extra-budgetary funds (such as social security funds) set up under separate legislation that may or may not have a separate annual appropriation.

Financial statements: reports compiled from accounting data after the end of a period, which is usually a year but may be more frequent. They may cover the whole government or an individual government entity. Annual financial statements are usually incorporated or included as separate documents in the government’s year-end reports (which also usually include material on differences from budget estimates and reports on non-financial performance). Accrual financial statements include a statement of financial performance, a statement of financial position (balance sheet), a statement of cash flows, and Notes, and are expected to follow the relevant accounting standards and generally accepted accounting principles.

 

Fiscal aggregates: the key fiscal summary indicators, including on the flow-side total expenditure and total revenue, net lending/net borrowing or overall fiscal balance; and on the stock-side gross and net debt, total assets, total liabilities, and net worth.

Fiscal forecasts: forecasts of the main fiscal aggregates, as well as the elements underlying them, including specific revenue heads; expenditures by either administrative, functional, or economic classification; and key assets and liabilities, including gross debt.

Fiscal openness: fiscal transparency (disclosure) in combination with direct public participation in fiscal policy.

 

Fiscal policies: in everyday terms, fiscal policies are government taxation, borrowing, spending, and the investment and management of public resources. In technical terms, fiscal policies are public policies implemented through the provision of non-market services, and the redistribution of income and wealth, financed primarily by taxes and other compulsory levies on nongovernment sectors (IMF Government Finance Statistics Manual 2014). Fiscal policies and activities are distinct from the regulatory, monetary, and commercial policies and activities of government. See also quasi-fiscal activities.

 

Fiscal reports: retrospective reports of a government’s actual (historical) revenues, spending and financing., including in-year and year-end budget outturn/execution reports, fiscal statistics, and annual financial statements. They may report the fiscal activities of the central government, state governments, or local governments, or of all levels of government in a country (referred to as the general government). Reports may cover a whole government in aggregate as an entity, and/or individual government entities e.g. ministries, departments or agencies. They may be on a cash or accruals basis.

Fiscal risks: factors that may cause fiscal outcomes to deviate from expectations or forecasts. Fiscal risks can arise from macroeconomic shocks or the realization of explicit or implicit contingent liabilities (obligations triggered by an uncertain future event).

 

Fiscal rules: a long-lasting constraint on fiscal policy through numerical limits on budgetary aggregates. This implies that boundaries are set for fiscal policy which cannot be frequently changed and some operational guidance is provided by specifying a numerical target that limits a particular budgetary aggregate.

 

Fiscal statistics or Government Finance Statistics: statistics on the government sector, derived from accounting data and statistical series, that facilitate analysis of the impact of government on the rest of the economy.

Fiscal transparency: openness toward the public at large about government structure and functions, fiscal policy intentions, public sector accounts, and projections. It involves ready access to reliable, comprehensive, timely, understandable, and internationally comparable information on government activities so that the electorate and financial markets can accurately assess the government’s financial position and the true costs and benefits of government activities, including their present and future economic and social implications. (Kopits and Craig, 1998, Transparency in Government Operations, IMF Occasional Paper No. 158 (Washington: International Monetary Fund).

Fiscal transparency evaluation: an assessment by the IMF of country practices against the IMF’s 2014 Fiscal Transparency Code.

General government: all resident units of central, state, or local government; all extra-budgetary funds, including social security funds at each level of government; and all resident nonmarket nonprofit institutions controlled and financed mainly by government units (the UN System of National Accounts).

Governance: the process by which decisions are made and implemented (or not implemented). Within government, governance is the process by which public institutions conduct public affairs and manage public resources. Good governance refers to the management of government in a manner that is effective, essentially free of abuse and corruption, and with due regard for the rule of law.

 

Independent body: one with a sufficiently broad mandate and full professional discretion in the discharge of its functions, the right and obligation to report on its work, unrestricted access to information, and the availability of appropriate human, material and monetary resources, all enshrined in the legal framework.

 

Independent fiscal institution: non-partisan public body, other than the central bank, government or parliament that prepares macroeconomic forecasts for the budget, monitors fiscal performance and/or advises the government on fiscal policy matters. These institutions are primarily financed by public funds and are functionally independent vis-à-vis fiscal authorities. Courts of Auditors are included in this definition if their activities go beyond the accounting control and cover any of the tasks mentioned above.

Instrument: any type of standard, norm, manual, assessment tool, or other document containing information on desired levels of fiscal transparency.

 

International Public Sector Accounting Standards (IPSAS): apply to the financial statements of national and sub-national governments, and other public sector bodies, apart from government business entities.

International Standards of Supreme Auditing Institutions (ISSAI): state the basic prerequisites for the proper functioning and professional conduct of supreme audit institutions and the fundamental principles of public sector auditing

Liability: an obligation of an entity arising from past transactions or events, the settlement of which results in the transfer or use of assets, provision of services, or other yielding of economic benefits in the future.

Long term: the period spanning ten or more years beyond the current year.

Medium term: three to ten years beyond the current year. Government medium term fiscal forecasts are typically the next budget year plus two or three years.

Medium-term budget framework: a framework for integrating fiscal policy and budgeting over the medium term by linking a system of aggregate fiscal forecasting to a disciplined process of maintaining detailed medium-term budget estimates by ministries reflecting existing government policies.

Multi-stakeholder initiative: comprehensive deliberative processes, involving a broad set of stakeholders from governments, private sector, and civil society, that form and adopt new norms, which they seek to make part of the global agenda, and implement on the ground.

 

National Accounts: measurements of the economic activity of a nation, including the contributions of individual economic sectors (households, corporations, government) to national output, expenditure, and income.

Nonfinancial information: quantitative and qualitative data on objectives, policies, operations, and results (outcome or impact). Information that falls outside the scope of mainstream financial statements.

Norms: instruments containing recommended or suggested good practices of varying degrees of specificity, but less recognized and/or specific than standards and less forceful in the expectations they create of state behavior.

Open Budget Index (OBI): a score out of 100 rating the public availability of eight key budget documents across the budget cycle. The index is derived from a sub-set of questions in the Open Budget Survey, and is the only internationally-comparable quantitative indicator of budget transparency, used to measure change over time in a country and to compare across countries.

 

Open Budget Survey (OBS): a survey of the openness of national budgets across the budget cycle, designed and managed by the International Budget Partnership. The Survey is administered by a civil society researcher in each country, and has been implemented every two years since 2006; the 2017 survey covers 115 countries. The Survey is completed with or without the involvement of government: most governments are invited to review the draft OBS, not all do so.

Open contracting: publishing and using open, accessible and timely information on government contracting to engage citizens and businesses in identifying and fixing problems.

 

Open data: digital data that is made available with the technical and legal characteristics necessary for it to be freely used, reused, and redistributed by anyone, anytime, anywhere.

 

Open fiscal data: fiscal data that has the characteristics of open data.

Open Government Partnership (OGP): an international multi-stakeholder initiative launched in 2011 to provide a platform for domestic reformers committed to making their governments more open, accountable, and responsive to citizens.

 

Outcomes: the positive or negative effects on social, environmental, economic, or other indicators arising from the delivery of outputs e.g., student learning, social equity, environmental restoration. Also referred to as impacts.

 

Outputs: the goods or services produced by government and delivered to the community and public e.g., teaching hours delivered, health services delivered

 

Participatory budgeting: a process in which community members directly decide how to spend part of a public budget, generally at subnational government level.

Performance information: information on the extent to which objectives have been achieved.

Public corporation: a legal entity that is owned or controlled by the government and that produces goods or services for sale in the market at economically significant prices.

Public financial management: the financial systems through which governments implement policies to achieve public goals. As defined by PEFA, the PFM system comprises reliable budgets, transparent public finances, management of assets and liabilities, policy-based fiscal strategy and budgeting, predictability and control in budget execution, accounting and reporting, and external scrutiny and audit.

Public participation in fiscal policy: the variety of ways in which citizens and non-state actors interact directly in public discussion and deliberation with state entities (governments, legislatures, Supreme Audit Institutions) on fiscal policy design and implementation.

 

Public-private partnership (PPP): an arrangement whereby the private sector provides infrastructure assets and services that traditionally have been provided by government (such as roads, railways, and schools) under long term contracts with the government.

Public sector: a classification drawn from sectors and subsectors of the UN System of National Accounts (SNA) classification consisting of general government and resident nonfinancial and financial public corporations. It includes all residential institutional units that are either owned or controlled by government.

Quasi-fiscal activities (QFAs): Activities undertaken by financial and nonfinancial public corporations, and sometimes by the private sector, at the direction of the government but not financed by government, that are fiscal in character—that is, in principle, they can be duplicated by specific fiscal measures, such as taxes, subsidies, or other direct expenditures. Typically, the financial impact of QFAs is not reported separately. Examples include public services or credit supplied by a public corporation on non-commercial terms, and obligations on natural resource companies to build local public infrastructure.

 

ROSCs: fiscal ROSCs are reports of fiscal transparency in individual countries published from 1998 to 2011 that assessed transparency against the 1998 and 2007 versions of the IMF Code of Good Practices in Fiscal Transparency. Assessments against the IMF’s 2014 Fiscal Transparency Code are referred to as Fiscal Transparency Evaluations.

 

Standards: detailed and specific guidelines for state practice that are promulgated by institutions with recognized authority to issue standards. With respect to fiscal transparency, international standard setters include the IMF, the International Public Sector Accounting Standards Board, INTOSAI, and the OECD.

Supreme audit institution: the public body of a state which exercises by virtue of law the highest public auditing function of that State, including auditing the public finances of the state. It may be a part of the judicial branch or part of the legislative branch of government, but should in any case be independent of the executive branch.

Tax expenditures: concessions or exemptions from a ‘normal’ tax structure that reduce government revenues and that, because the government policy objectives could be achieved alternatively through a subsidy or other direct outlays, are regarded as equivalent to a budget expenditure.

Annex 1: The full text of the GIFT High-Level Principles

The Parties to these Principles,

Recognizing that fiscal policies – taxing, borrowing, spending, investing, and managing public resources – have critical impacts on economic, social and environmental outcomes in all countries at all levels of development,

Believing that access to high quality information, meaningful public participation, and effective accountability mechanisms:

− enhance the integrity, quality and implementation of fiscal policies,

− reduce corruption,

− increase the legitimacy of and trust in government,

− increase willingness to pay taxes and provide financing,

− strengthen the effectiveness of development assistance,

− and thereby strengthen the efficiency, equity, effectiveness, stability and sustainability of fiscal policies and enhance the likelihood that fiscal policies have positive economic, social and environmental impacts,

Recognizing that the public has the right to information on fiscal policies and effective opportunities to participate in the design and implementation of fiscal policies,

Recognizing also the critical contribution that greater fiscal transparency, participation and accountability can play in facilitating more effective international cooperation in the pursuit of financial stability, poverty reduction, equitable economic growth, and stewardship of the environment and the global commons,

Recognizing the important role in setting norms and standards played by initiatives such as the International Monetary Fund’s Code of Good Practices on Fiscal Transparency, the Organisation for Economic Cooperation and Development’s Best Practices in Budget Transparency, the International Budget Partnership’s Open Budget Index, International Public Sector Accounting Standards promulgated by the International Public Sector Accounting Standards Board, International Standards of Supreme Audit Institutions promulgated by the International Organization of Supreme Audit Institutions, and the multi-agency Public Expenditure and Financial Accountability program,

Acknowledging that while the range of consensus has grown, there remain gaps and inconsistencies in the existing norms and standards,

Recalling that international instruments, both those that are universally applicable, such as The Universal Declaration of Human Rights, The International Covenant on Civil and Political Rights, and The International Covenant on Economic, Social and Cultural Rights, as well as regional instruments, address issues of free speech, access to information, independence of the Supreme Audit Institution, participation, and anticorruption among others that are relevant to fiscal policy,

Affirming the reciprocal relationship between citizens and government, in which citizens provide resources to and entrust governments with stewardship over public resources, and, in turn, expect to receive information on public finances and fiscal policies and to have opportunities to participate in fiscal policy-making,

Recognizing that developments in information and communication technologies have greatly lowered the costs of compiling and disseminating information, and facilitate new forms of citizen – government interactions,

Recognizing that these Principles will need to be implemented in a manner that is consistent with diverse country circumstances while promoting progress in all countries towards the common goal of transparent, participatory and accountable management of fiscal policies,

Recognizing the need for cooperation and information sharing between all stakeholders to assist states to build capacity and learn from experience in the transparent, participatory and accountable management of fiscal policies,

Inviting all states and non-state actors, including individuals, civil society groups, nongovernmental organizations, community-based organizations, professional associations and the private sector to work together to promote the progressive achievement of these Principles,

Recognizing also the desirability of transparency, participation and accountability in all branches of government and inviting legislative and judicial bodies to implement these Principles in their proceedings,

Declare these High-Level Principles to guide policy makers and all other stakeholders in fiscal policy in their efforts to improve fiscal transparency, participation and accountability and to help promote improvements in the coverage, consistency and coherence of the existing standards and norms for fiscal transparency:

Access to Fiscal Information

  1. Everyone has the right to seek, receive and impart information on fiscal policies. To help guarantee this right, national legal systems should establish a clear presumption in favor of the public availability of fiscal information without discrimination. Exceptions should be limited in nature, clearly set out in the legal framework, and subject to challenge through low-cost, independent and timely review mechanisms.
  2. Governments should publish clear and measurable objectives for aggregate fiscal policy, regularly report progress against them, and explain deviations from plans.
  3. The public should be presented with high quality financial and non-financial information on past, present, and forecast fiscal activities, performance, fiscal risks, and public assets and liabilities. The presentation of fiscal information in budgets, fiscal reports, financial statements, and National Accounts should be an obligation of government, meet internationally-recognized standards, and should be consistent across the different types of reports or include an explanation and reconciliation of differences. Assurances are required of the integrity of fiscal data and information.
  4. Governments should communicate the objectives they are pursuing and the outputs they are producing with the resources entrusted to them, and endeavor to assess and disclose the anticipated and actual social, economic and environmental outcomes.

The Governance of Fiscal Policy

  1. All financial transactions of the public sector should have their basis in law. Laws, regulations and administrative procedures regulating public financial management should be available to the public, and their implementation should be subject to independent review.
  2. The Government sector should be clearly defined and identified for the purposes of reporting, transparency, and accountability, and government financial relationships with the private sector should be disclosed, conducted in an open manner, and follow clear rules and procedures.
  3. Roles and responsibilities for raising revenues, incurring liabilities, consuming resources, investing, and managing public resources should be clearly assigned in legislation between the three branches of government (the legislature, the executive and the judiciary), between national and each sub-national level of government, between the government sector and the rest of the public sector, and within the government sector itself.
  4. The authority to raise taxes and incur expenditure on behalf of the public should be vested in the legislature. No government revenue should be raised or expenditure incurred or committed without the approval of the legislature through the budget or other legislation. The legislature should be provided with the authority, resources, and information required to effectively hold the executive to account for the use of public resources.
  5. The Supreme Audit Institution should have statutory independence from the executive, and the mandate, access to information, and appropriate resources to audit and report publicly on the raising and commitment of public funds. It should operate in an independent, accountable and transparent manner.

10. Citizens should have the right and they, and all non-state actors, should have effective opportunities to participate directly in public debate and discussion over the design and implementation of fiscal policies