IMF Publishes Fiscal Transparency Evaluation for Georgia
The International Monetary Fund (IMF) has today published a Fiscal Transparency Evaluation report for Georgia. The report assesses Georgia’s fiscal transparency practices against the standards set out in the IMF’s Fiscal Transparency Code and was carried out in December 2016 by the IMF’s Fiscal Affairs Department. The Government of Georgia requested the evaluation.
Georgia has taken important steps to enhance fiscal transparency over the past decade. Fiscal reports have become more comprehensive and timely, fiscal forecasts and budgets have become more forward-looking and policy-orientated, and disclosure of fiscal risks has improved substantially.
Reflecting these efforts, the report found that many elements of sound fiscal transparency practices are in place in Georgia. Assessed against the standards of the Fiscal Transparency Code, the report found that Georgia meets the good or advanced level practice on 18 of 36 principles, and the basic standard on a further 10 principles.
The report recognizes several key strengths of fiscal transparency practices in Georgia. For example, fiscal reports are published in a frequent and timely manner and include extensive information on the use of public resources. Budget documentation presents medium-term macroeconomic forecasts and spending plans; is prepared in accordance with a clear organic budget law; and, is subject to independent scrutiny. In addition, the government discloses and assesses the key risks to public finances, publishing advanced macroeconomic risk analysis, debt sustainability analysis and an assessment of the fiscal risks from major public corporations and power purchase agreements.
At the same time, the evaluation highlights several areas where Georgia’s fiscal transparency practices could be further improved. In particular: fiscal reports and statistics do not provide a complete picture of general government activity; central government annual consolidated financial statements are not subject to independent audit; there is no reporting on compliance with fiscal rules; and mechanisms to mitigate fiscal risks related to public corporations and power-purchase agreements are not yet fully developed. However, efforts are underway to address these and other shortcomings.
Key recommendations of this report to strengthen fiscal transparency further, include:
- Expanding the coverage of the key fiscal reports and the government finance statistics to consolidate the own-funded activities of legal entities of public law;
- Producing annual consolidated general government sector fiscal reports and enhancing the accuracy and coverage of balance sheet information;
- Subjecting the annual consolidated central government financial statements to independent audit as soon as practicable;
- Publishing information on the revenue foregone by tax expenditures;
- Reviewing the fiscal rules and regularly reporting on compliance with those rules;
- Providing more explanation of the macroeconomic forecasts and reconciling new macroeconomic and fiscal forecasts with prior forecasts;
- Tightening the criteria for drawing on budget contingency provisions; and
- Strengthening controls on lending and equity injections to public corporations and placing limits on liabilities from public private partnerships.
The Georgian authorities welcomed the report’s findings and its publication. The implementation of reforms planned by the authorities, and recommended in this report, will result in further improvements in fiscal transparency in Georgia in the coming years.
Further information about the IMF’s Fiscal Transparency Code and Georgian Fiscal Transparency Evaluation can be found at: http://www.imf.org/external/np/fad/trans/