A Study on Fiscal Transparency of Central Government
Date Issued
2008
Date
2008
Author(s)
Tsai, Mei-Nar
Abstract
In 1990s, after the Mexican Peso crisis and the Asian Financial crisis, the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) both recognized that one of the key aspects for good governance is to increase fiscal transparency. Therefore, these two international organizations successively constructed overall frameworks to strengthen government''s financial disclosure. On the contrary, in Taiwan, the imbalance of fiscal information is not only less weighted than the unbalance budget, but also reveals the problems of government''s financial bases, which may additionally increase the budget deficit.his research applies the public choice theory to review the government failure in Taiwan''s domestic fiscal information, and the interaction relations among main budget decision-makers that including the public, interest groups, political figures and bureaucrats. Thereafter, comparing Taiwan''s current information disclosure policies with OECD’s Best Practices for Budget Transparency, IMF’s The Code of Good Practices on Fiscal Transparency, and The Government Financial Statistics Manual 2001. Furthermore, by adopting 17 measurement criteria from the result of 2007 OECD Budget Practices and Procedures survey, I take further step to construct and grade fiscal information transparency index among leading countries and Taiwan. y research finds that in the study of year 2007 along with covering 38 countries, Taiwan only receives 7 points out of 17 in the fiscal information transparency index grade, far behind her rival nation South Korea with 10.75 points ranking in the 11th. Taiwan has obvious fiscal information gaps mainly in the following areas, including the vague definitions of government sectors, the incomplete report regarding the size of government''s spending, the Public Debt Act''s statistics connotations do not follow international standards, lacking of properly stating the fiscal risks, discontinuing the medium-term fiscal extrapolations, and the reading disability in annual budget documentations and audited report due to its complex contents.n order to improve Taiwan''s fiscal information disclosure mechanics, my suggestions are, first, considering editing a consolidated fiscal report of the central government that clearly defines the category of the government sector. Secondly, following the international definition to redefine the Public Debt Act and appropriately expressing key fiscal risks. Thirdly, abolishing the special budget or specifically pointing out its criteria, further severely examining, eliminating or merging the non-profit special funds. Fourthly, continuing to issue the medium-term fiscal extrapolations and publishing related economic assumptions. Fifthly, bringing the long-term fiscal report regularly, and assessing the budgetary implications of demographic change. Sixthly, guiding government''s accounting system toward to the accrual basis and adding the long-term liabilities and fixed assets into the Balance Sheet. Seventhly, publishing the guidebook to read budget and the easy reading version of the annual budget and final account reports. Last but not least, continuing to adopt the information technology in preparing the government''s budget and accounting tasks. For doing so, it will not only reducing the cost for disclosure information but is also one of the important links to improve the fiscal information disclosure system.
Subjects
fiscal transparency
asymmetric information
public choice theory
principal-agent theory
fiscal illusion
SDGs
Type
thesis
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