Economywatch: Fiscal transparency: a hallmark of good governance

A two-week regional course on public financial management which covers key topics such as planning, budgeting and financial management in the public sector was held in Banjul from 19 to 30 March this year.

This course, which targeted mainly officials from central banks, ministries of finance and economic planning, national planning, accountant-generals’ departments revenue authorities, statistics offices, and  parliamentary commissions in the sub-region, delved into issues which may help to curb fiscal indiscipline and corruption in the sub-region.

The object of this article therefore is to bring to light the Code of Good Practices on Fiscal Transparency as established by the International Monetary Fund, which takes the lead in promoting greater fiscal transparency, because of its fiscal management expertise and universal membership.

Fiscal transparency would therefore make a major contribution to the cause of good governance, as it gives rise to a better-informed public debate about the design and results of fiscal policy, makes governments more accountable for the implementation of fiscal policy, and thereby strengthens credibility and public understanding of macroeconomic policies and choices.

The code is based around the following key objectives: roles and responsibilities in government should be clear; information on government activities should be provided to the public; budget preparation, execution, and reporting should be undertaken in an open manner; and fiscal information should attain widely accepted standards of data quality and be subject to independent assurances of integrity.

The code sets out what governments should do to meet these objectives in terms of principles and practices. These principles and practices are distilled from the IMF’s knowledge of fiscal management practices in member countries.

An abridged version of the Code states that the clarity of roles and responsibilities in public management of states resources, public availability of information, open budget preparation, execution, and reporting, and assurances of integrity.

 It further states that th government sector should be distinguished from the rest of the public sector and from the rest of the economy, and policy and management roles within the public sector should be clear and publicly discussed, and that there should be a clear legal and administrative framework for fiscal management

The public should also be provided with full information on the past, current, and projected fiscal activity of government and a commitment should be made in the timely publication of fiscal information.

On public availability of information, the budget documentation, final accounts, and other fiscal reports for the public should cover all budgetary and extra-budgetary activities of the central government, and the consolidated fiscal position of the central government should be published.

It states that information comparable to that in the annual budget should be provided for the outturns of the two preceding fiscal years, together with forecasts of the main budget aggregates for two years following the budget. 

The international code of good practices states further: “Statements describing the nature and fiscal significance of central government contingent liabilities and tax expenditures, and of quasi-fiscal activities, should be part of the budget documentation.

“The central government should publish full information on the level and composition of its debt and financial assets. Where sub-national levels of government are significant, their combined fiscal position and the consolidated fiscal position of the general government should be published.

“The publication of fiscal information should be a legal obligation of government, and advance release date calendars for fiscal information should be announced.

The budget documentation, it stipulates, should specify fiscal policy objectives, the macroeconomic framework, the policy basis for the budget, and identifiable major fiscal risks. Budget information should be presented in a way that facilitates policy analysis and promotes accountability. Procedures for the execution and monitoring of approved expenditure and for collecting revenue should be clearly specified. And there should be regular fiscal reporting to the legislature and the public.

Fiscal data should met accepted data quality standards, the Code says, adding that fiscal information should be subjected to independent scrutiny.

However it has been noted that the adoption and implementation of this code has been a herculean task for governments and policymakers in the member states of ECOWAS.

“These are some of the issues we dealt with in the just concluded two-week workshop we had in Banjul, and we are encouraging member states to get them adopted,” says WAIFEM’s Macroeconomic Management Department Director Johnson P. Asiama.

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Financial planners call for strong laws to tackle corruption

Public officials of economic and financial departments in the sub-region have called for strengthened and enforced legislations by various governments with the aim of tackling fiscal indiscipline and perennial corruption in the sub-region.

The sub-regional officials, who completed a two-week course on public financial management organised by the West African Institute for Financial and Economic Management (WAIFEM) in Banjul from 19 to 30 March at the Paradise Suites Hotel, say investigative  institutions and judicial arm of governments must be truly independent and capable of prosecuting culprits.

“There is the need to enforce and strengthen legislations by various governments with the aim of tackling fiscal indiscipline and perennial corruption in the sub-region,” they say.

The financial planners noted that the adoption of best practices of good governance, transparency and accountability are precondition for the achievement of rapid economic growth, sustainable development and poverty reduction.

“Exemplary leadership and change of attitude are critical to the attainment of the overall objective of sustainable development in the sub-region,” they added.