Transparency is a goal of its own. Article 19 f the Universal Human Rights Declaration guarantees the fundamental right of access to public sector information. Transparency is also an instrument for improvement of public sector management. Transparency reinforces the voice of the citizens by helping them to exert influence on decision making, either directly through elected representatives and through a political process. Generation of information which illustrates the intentions, activities and consequences for the public sector is also necessary, though insufficient in terms of reaching a satisfactory level of accountability.
Fiscal transparency is an important element in the effective management of public finances, and it helps in building the confidence of the general public in the work of public institutions, thus contributing to the sustainability in public policy implementation.. Transparency is also a window to the budget execution of the state, helping the general public to call the government to account.
Fiscal transparency is a part of a broader notion of transparency and access to public sector information. Transparency has two different dimensions: first, access to information associated with the processes and procedures on the basis of which the public sector makes and implements decisions; and second, access to information owned by the public sector.
Fiscal transparency is a broader notion than the notion of budget transparency. It includes all the activities undertaken by the sectors funded from the budget (budget transparency) and all those which are not funded from the budget, so called "quasi-fiscal" activities (undertaken by the government sector public enterprises or central banks). Fiscal transparency refers to all the assets and liabilities of the public sector as well as revenues and expenditure approved in the annual budget. It also means that fiscal information shall be disclosed and citizens involved in fiscal policy design and fiscal decision making.
Fiscal transparency is commonly defined and measured according to the availability and quality of information pertaining to the institutional set up in the management of public finances and the existing financial operations of the public sector.
Fiscal transparency is particularly important because it makes it possible for the citizens, government creditors and participants in the financial markets to precisely measure the financial position of the country and determine the actual costs and benefits from government activities and measures, including the current and future economic and social implications. Fiscal information availability contributes to the reduction of market risk and disproportionality in holding of information, allowing the markets to function in a more efficient manner. Countries with more transparent information exhibit a stricter financial discipline, better credit rating and lower costs of public sector borrowing.
Higher level of transparency may be achieved only by combining transparency with participation of citizens in decision making and public policy creation.
Also, fiscal transparency means provision of comprehensive and accurate information on past, current and future activities of the government, while the availability of such information improves the quality of the decision making process. Fiscal transparency also helps in highlighting possible risks on the fiscal sector. At the same time, the greatest benefit from the fiscal transparency may be enjoyed by the citizens which are provided the necessary information they can use to call the government to account. The government may also have a benefit from fiscal transparency, since it thus has an easier access to the international capital markets “ (Code of Good Practices on Fiscal Transparency, IMF).
More information about fiscal transparency and its significance for the public and the state is available in the section “Publications”.