IMF Publishes Fiscal Transparency Evaluation for Austria

Stocks and Financial Services Press Releases Thursday June 28, 2018 09:14
IMF--28 Jun--International Monetary Fund

The International Monetary Fund (IMF) has today published a Fiscal Transparency Evaluation report for Austria. The report assesses Austria's fiscal transparency practices against the standards set out in the IMF's Fiscal Transparency Code and was carried out in February 2017 by the IMF's Fiscal Affairs Department. The Government of Austria requested the evaluation.

Austria has built strong fiscal institutions over the past decade, notably through the budget reforms introduced in 2009 and 2013, which have significantly improved fiscal transparency. Reflecting these efforts, the report found that many elements of sound fiscal transparency practices are in place in Austria. Assessed against the standards of the Fiscal Transparency Code, the report found that Austria meets the good or advanced level practice on 24 of the 36 principles, and the basic standard on a further 5 principles.

The report recognizes several key strengths of fiscal transparency practices in Austria. For example, fiscal reports, covering a substantial part of public activities, are published in a frequent and timely manner and include reconciliations between alternative measures of fiscal aggregates. Budgets and forecasts have a clearer medium-term and performance-oriented focus, and are guided by clear fiscal policy objectives, the compliance with which is subject to independent scrutiny. In addition, there is regular, high-quality reporting on the long-term sustainability of public finances, and on many of the risks that public finances are exposed to (including explicit guarantees, the financial sector, and public corporations), accompanied by sound frameworks for their management.

At the same time, the evaluation highlights several areas where Austria's fiscal transparency practices could be further improved. In particular: fiscal reports and statistics do not provide a complete picture of public sector activity; the current legal framework prevents the Austrian Court of Audit from expressing a completely independent audit opinion on the government's financial statements; the current presentation of the medium-term budgetary framework is not conducive to a strategic fiscal policy debate in the Spring; the credibility of budget documentation is affected by the lack of reconciliation of differences between successive vintages of fiscal forecasts and by the excessive size of budgetary carry-forwards; and there is a need to address the absence of a comprehensive summary report of specific fiscal risks. However, efforts are underway to address these and other shortcomings.

Key recommendations of this report to strengthen fiscal transparency further, include:

Expanding the institutional coverage of the key fiscal reports to incorporate all public corporations, and enhancing the accuracy and coverage of balance sheet information;Establishing a clear and transparent delineation between the preparation and presentation of consolidated financial statements and the auditing function;Adapting the current medium-term budgetary framework to include estimates of the main aggregates broken down by economic category;Establishing a carryforward mechanism that prevents the accumulation of unspent budget appropriations indefinitely and without limit, and, as a consequence, ensures parliamentary scrutiny over the significant budget reallocations;Providing a more detailed explanation on the main factors underpinning the macroeconomic forecasts and reconcile changes between successive medium-term fiscal forecasts;Publishing a summary fiscal risks report that details all material risks to public finances, their magnitudes, and strategies for their management.The Austrian authorities welcomed the report's findings and its publication. The implementation of reforms planned by the authorities (some of which are already underway), and recommended in this report, will result in further improvements in fiscal transparency in Austria in the coming years.

Further information about the IMF's Fiscal Transparency Code and Austrian Fiscal Transparency Evaluation can be found at:http://www.imf.org/external/np/fad/trans/

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