THE INTERNATIONAL MONETARY FUND has undertaken an assessment of fiscal transparency in Ireland.
The IMF visited Dublin from 12 – 25 March 2013 to conduct a pilot Fiscal Transparency Assessment, on a mission led by Richard Hughes and including Jason Harris, Tim Irwin, Sailendra Pattanyak, Mick Lucey and David Watkins.
The revised Fiscal Transparency Code from the IMF aims to strengthen fiscal reporting standards to reflect on the lessons of the recent economic crisis, the fund said.
Evaluate
The object of the FTA was to evaluate Ireland’s fiscal reporting, forecasting and budgeting, and fiscal risks analysis and management practices against the standards set by the IMF’s newly revised Fiscal Transparency Code.
Among the people they met were officials from the Department of Finance, the Central Statistics Office and the Oireachtas.
According to the report, Ireland is now approaching best practice in fiscal reporting and forecasting and meets the basic requirements for fiscal risk disclosure under the IMF’s Fiscal Transparency Code – “following a series of substantial, if somewhat piecemeal, improvements”.
The IMF notes that since the early 1990s, European integration and the recent financial crisis have been catalysts for significant improvements in fiscal transparency in Ireland.
Today, fiscal reporting is relatively comprehensive, frequent, and reliable but also quite fragmented. Fiscal statistics cover all general government entities and 81 percent of public sector expenditure but still exclude public corporations with net expenditure of 12 percent and assets and liabilities of 204 percent of GDP.
The report notes that the Irish government prepares two sets of annual accounts which are audited and published within nine months of year-end. However, it said that “neither provides a comprehensive overview of the central government finances or follows international accounting standards though they do conform with domestic legal requirements”.
It added that: “Ireland’s general government fiscal data are generally reliable. ”
Overview
The IMF report also says that Ireland’s fiscal forecasts and budgets “provide a credible, detailed, and policy-oriented overview of fiscal prospects”. But it says they could “provide a more comprehensive account of extrabudgetary activity, changes between forecasts, and longer-term trends”.
Fiscal risks are relatively large in Ireland, said the IMF, and their disclosure and management are “diffuse”.
The report states that the Irish government has “ambitious plans” to “improve further the timeliness, quality, and comprehensiveness of its budgets, statistics, and accounts.”
The government plans to begin publishing quarterly general government fiscal statistics and bring forward the submission of the budget by two months to mid-October to meet the requirements of certain EU fiscal governance reforms.
According to the IMF:
Ireland has the capacity and information to bring its fiscal transparency practices into line with international best practice standards within a reasonable time frame and relatively modest additional cost
Consolidating this information into a set of summary fiscal documents would put Ireland ahead of EU reporting requirements, in line with international accounting standards, and at the forefront of fiscal transparency practice.
It says that over five years, the reforms would, for example, allow the government to forecast and monitor its in-year performance against national and EU-wide fiscal rules.
The full report can be read here.
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