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0 The International Monetary Fund (IMF) has stated that debt transparency not only benefits countries directly but is also essential for the work of the IMF.
Hidden and otherwise opaque forms of debt make it more difficult for the Fund to fulfill its core mandate in a number of ways, the Fund said.
For example, it stated, collateralised loans, novel and complex forms of financing, and confidentiality agreements make it difficult for the IMF to accurately assess a country’s debt and help bring its economy back on track.
“Thus, the Fund works to bring the benefits of debt transparency to countries directly through technical assistance and also addresses the issue in our program engagements,” a publication by the Fund titled “Hidden Debt Hurts Economies, Better Disclosure Laws Can Help Ease the Pain” said.
It added “Well-designed laws make it harder to hide debt. But there are not enough of these laws on the books, despite their demonstrated benefits. Given the critical importance of getting transparency right, countries and their international partners must push for reforms to improve domestic legal frameworks, which in turn benefits both borrowers, legitimate creditors, and the system more broadly. Turning stones has never been more important.”
The Fund further explained that the disclosure of public debt may also be inhibited where there is ineffective oversight governance by legislatures and supreme audit institutions (national government audit institutions), which are all important guarantors of accountability.
Legislative bodies must be able to monitor and scrutinise public debt on behalf of the people, and they need to have staff able to read and grasp highly technical reports, it urged.
Several legislatures have a committee system—such as committees on the budget and public accounts—which allows for specialization among legislators.
An example is in the United States, where the Treasury Secretary is required by law to send the annual public debt report not to Congress as a whole, but to two specific committees—House Ways and Means and Senate Finance.
“We also recommend that laws provide supreme audit institutions with the authority and the necessary powers to monitor and audit government debt and debt operations,” the Fund said.
Globally, there is about $1 trillion in hidden debt—borrowing for which a government is liable, but which is not disclosed to its citizens or to other creditors. Read more in our blog. https://t.co/O57Wa1hcwo pic.twitter.com/and5zFJktJ
— IMF (@IMFNews) May 31, 2024
The post IMF warns countries against hiding debts; says it makes it more difficult to fulfill its core mandate first appeared on 3News.
