IMF new Fiscal Transparency Assessment (FTA)

[Napodano]

The IMF Fiscal Affairs Department is currently testing its new Fiscal Transparency Assessment (FTA) report that will replace its Reports on the Observance of Standards and Codes (ROSC's). 
 The new assessment is based on a revised transparency code.
 
Attached to this post you can find:
- The new Transparency Code draft
- A policy paer on the FTA
- the FTA report piloted in Ireland

Check this video out in which the reasons for the new code are explained and the new FTA is presented 
http://www.youtube.com/watch?v=MJ5CleSWuZI

Any comment on the new directions taken by the IMF on tranparency? Interesting for me is the shift from clarity to quality of fiscal reporting and the new emphasis on fiscal risks.

[atseacliff]

Thanks for posting - I have been doing a little bit of catch up on this.  My initial feeling having watched snippets of the presentation and doing a brief review of the revised draft code is that it is an excellent analytical tool. 

Some of the more important enhancements are:
- Expanded institutional coverage - from general government to public sector coverage.
- Focus on the quality and reliability of fiscal reporting rather than internal functions and processes (the latter addressed more explicitly in PEFA's)
- Setting graduated milestones to best international practice - recognizing that many of the modern standards which are implicit in the Code (e.g. IPSAS) outstrip countries ability to comply
- A very clear three pillar modular approach i.e. (a) Fiscal Reporting (Present); (b) Fiscal Forecasting (Future) and (c) Fiscal Risk (Uncertainties).
- Traffic light/heat maps to provide useful summary graphics - in the Ireland example this is a very effective tool in highlighting critical deficiencies in fiscal transparency reporting.   


My own sense is that the IMF have done a good job in sticking closely to their surveillance/reporting agenda.  This leaves plenty of room for the PEFA Framework to focus on PFM processes and functions (e.g. procurement, audit and public accountability).  As a serial PEFA assessor I also found that the revised Code offers a useful glimpse of the direction in which the PMF needs to move.   

I was a little skeptical as to the merits of the new Code but first impressions are favorable.  I would be surprised if there isn't a large take-up of the revised Code in both developing and more advanced countries.   

[John Short]

Andy,

Thanks for this - you say "As a serial PEFA assessor I also found that the revised Code offers a useful glimpse of the direction in which the PMF needs to move".   

PFM or PEFA given the ongoing review of PEFA?

[atseacliff]

John

I meant the PEFA Framework.  I listed various elements of the revised Code - all of which I see as enhancements in a well engined tool.  It also got me thinking about some of the issues which might need to be addressed in the PEFA review -

- Addressing different stages of advancement more explicitly e.g. PI-25(iii) addresses IPSAS and some recognition of cash/modified accruals but this could be more explicit in the scoring.  (PEFA was never intended to reflect more than the basics of a well functioning system however are those basics shifting upwards over time and should the tool recognize a spectrum of development?)
- The relative importance of indicators and sub-indicators. e.g. In PI-26 I think the headline score should reflect quality and scope of work. Accumulating the overall score with issues of timeliness and evidence of follow-up dilutes the message. Perhaps a traffic light system or clearer hierarchy of indicators might address this. I have  seen some work which Ron Quist did a few years ago in this direction which was interesting but complex.  Perhaps the new Framework can address this.
 - New elements - things have moved on since 2006 - e.g. IPSAS, IIA Standards, the sovereign debt crisis (fiscal risk); opportunities missed the first time round (e.g. asset management) - you will have your own list.  Perhaps dropping some indicators (PI-22) and merging others (PI 18 and PI-20) would further help the focus of the Framework.
- Addressing the broader public sector.  This is partially addressed through PI-8 and PI-9 plus the SNG Guidelines however more on relations between the public and private sector and SOE's would be useful.  Maybe a more explicit modular basis of linking tiers of the public sector might be an interesting avenue to explore (e.g. CG, SNG, SOE/PPP).

All of the above needs to be seen in the context of the ethos in which the Framework was designed - a quick snapshot of the PFM system.