Code of Good Practices on Fiscal Transparency

The Code of Good Practices on Fiscal Transparency developed by the International Monetary Fund is meant to guarantee comprehensive information to the public on the tasks of government, fiscal objectives and the public budgets. For Caio K. Koch-Weser, Federal Ministry of Finance, the transparency required by this behaviour codex in fiscal and monetary policy is not only an elementary prerequisite for democratic control but is particularly important in light of increasing globalisation and the economy-policy monitoring function of the IMF. For Germany the necessity of fiscal transparency is seen within the framework of the European Economic and Currency Union, and in particular the Stability and Growth Pact, and the necessary fiscal policy co-ordination. For Dr. Dietmar Hornung, DEKA Bank, Frankfurt, the implementation of standards and codes can help to improve information and to enhance stability and the political process as well as to dampen the volatility of capital markets: "Empirical studies confirm the connection between fiscal transparency and fiscal performance. Greater fiscal transparency coincides, as a rule, with a lower budget deficit as well as a lower level of public debt. Therefore, the Code of Good Practices on Fiscal Transparency is an effective instrument." For Prof. Horst Tomann, Free University of Berlin, fiscal transparency requires that "the principles of clarity, truth and completeness be pursued when preparing and approving the budget. The Code of Good Practices on Fiscal Transparency that the IMF developed on the basis of its advisory experience consists of nothing more than these principles."