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The IMF: Fiscal Reports Do Not Provide a Complete Picture of General Government Activity

The IMF: Fiscal Reports Do Not Provide a Complete Picture of General Government Activity

The IMF advises government to evaluate annual consolidated financial statements by independent audit, – Fiscal Transparency Evaluation report for Georgia prepared by The International Monetary Fund (IMF) notes.

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.

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, the IMF notes that efforts are underway to deal with these and other shortcoming.

  • 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.

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.