UK at forefront of fiscal reporting practices worldwide, says IMF

18 Nov 16
The UK government has scored highly on an international fiscal transparency measure published by the International Monetary Fund, in which it was advised to consider scrapping the Autumn Statement.

The Fiscal Transparency Evaluation, published this week, was launched at the request of former prime minister David Cameron, and was carried out in July by the fund’s fiscal affairs department.

For 33 out of 46 transparency principals, the UK was rated as good or advanced, with only four regarded as yet to be achieved. According to the fund, the high scores reflect underlying strength of fiscal institutions and ongoing efforts to improve the transparency of the public finances.

Fiscal reporting in the UK is comprehensive, covering the whole of the public sector balance sheet in the Whole of Government Accounts. This places the UK as the forefront of fiscal reporting practices worldwide, the report found. However, the fund recommends reducing the long delays in publication of end of year financial statements “to improve their usefulness in informing future year’s fiscal policy”. The fund recommends that consistency is enhanced between the audited WGA, and the public sector finances outturn reports, as well as quickening the publication of the WGA.

Forecasting and budgeting are also of a high quality, building on credible and thorough macro-fiscal forecasts and a comprehensive medium-term budget framework. Also, this is supported by clearly understandable and comprehensive documentation.

However, the fund noted that the combination of fiscal policy objectives that appear to change frequently, and the Autumn Statement’s evolution into a “mini-budget” makes it “difficult to fully grasp how fiscal policy is being implemented through the budget.” There should instead be one single fiscal event each year.

Fiscal risk reporting and management practices were, the report found, particularly strong on risks related to the wider economy, the sustainability of the public finances and the financial sector. However, there was a need to address the absence of a comprehensive summary report of specific fiscal risks.

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