Question 43

Does the Executive’s Budget Proposal or any supporting budget documentation present projections that assess the government’s future liabilities and the sustainability of its finances over the longer term? (The core information must cover a period of at least 10 years and include the macroeconomic and demographic assumptions used and a discussion of the fiscal implications and risks highlighted by the projections.)
 * a. Yes, information beyond the core elements is presented to assess the government’s future liabilities and the sustainability of its finances over the longer term.
 * b. Yes, the core information is presented to assess the government’s future liabilities and the sustainability of its finances over the longer term.
 * c. Yes, information is presented, but it excludes some core elements.
 * d. No, information related to future liabilities and the sustainability of finances over the longer term is not presented.
 * e. Not applicable/other (please comment).

Guidelines
Question 43 focuses on government’s future liabilities and the sustainability of its finances over the longer-term, asking whether “core” information related to these issues is presented. These core components must include:
 * Projections that cover a period of at least 10 years.
 * The macroeconomic and demographic assumptions used in making the projections.
 * A discussion of the fiscal implications and risks highlighted by the projections.

Good public financial management calls for budgets to include fiscal sustainability analyses. The IMF’s Fiscal Transparency Handbook (2018) recommends that governments regularly publish the projected evolution of the public finances over the longer term (see Principle 3.1.3.). Future liabilities are a particularly important element when assessing the sustainability of public finances over the long term. Future liabilities are the result of government commitments that, unlike contingent liabilities, are virtually certain to occur at some future point and result in an expenditure. A typical example consists of government obligations to pay pension benefits or cover health care costs of future retirees. Under a cash accounting system, only current payments associated with such obligations are recognized in the budget. To capture the future impact on the budget of these liabilities, a separate statement is required.

Beyond the core information, some governments may also provide other information about the sustainability of their finances, including for example: projections that cover 20 or 30 years; multiple scenarios with different sets of assumptions; assumptions about other factors (such as the depletion of natural resources) that go beyond just the core macroeconomic and demographic data; and a detailed presentation of particular programs that have long time horizons, such as civil service pensions.

For more details on future liabilities, see Guide to Transparency in Public Finances: Looking Beyond the Core Budget. To answer “a,” the Executive’s Budget Proposal or supporting documentation must present all of the core information related to future liabilities and the sustainability of government finances over the longer term as well as some additional information beyond the core elements. To answer “b,” the Executive’s Budget Proposal or supporting documentation must present all of the core components noted above. Answer “b” is also accepted if one of the core elements is not presented but additional information beyond the core elements is presented. A “c” answer applies if some information related to future liabilities is presented, but some of the core pieces of information are not included. Answer “d” applies if no information is presented on future liabilities and the sustainability of government’s finances

External References

 * IMF’s Fiscal Transparency Handbook (2018), Principle 2.1
 * Guide to Transparency in Public Finances: Looking Beyond the Core Budget