Question 33

Does the Executive’s Budget Proposal or any supporting budget documentation present information on extra-budgetary funds for at least the budget year? (The core information must include a statement of purpose or policy rationale for the extra-budgetary fund; and complete income, expenditure, and financing data on a gross basis.)
 * a. Yes, information beyond the core elements is presented for all extra-budgetary funds.
 * b. Yes, the core information is presented for all extra-budgetary funds.
 * c. Yes, information is presented, but it excludes some core elements or some extra-budgetary funds.
 * d. No, information related to extra-budgetary funds is not presented.
 * e. Not applicable/other (please comment).

Note on all government activities that may have an impact on the budget
It is essential that all government activities that may have an impact on the budget — in the current budget year or in future budget years — be fully disclosed to the legislature and the public in budget documents. In some countries, for instance, entities outside central government (such as public corporations) undertake fiscal activities that could affect current and future budgets. Similarly, activities that can have a significant impact on the budget, such as payment arrears and contingent liabilities, sometimes are not properly captured by the regular presentations of expenditure, revenue, and debt.

Guidelines
Question 33 focuses on extra-budgetary funds, asking whether “core” information related to these funds, which exist outside the budget, are presented. These core components include:
 * a statement of purpose or policy rationale for the extra-budgetary fund (i.e., why was a particular fund set up? what is it used for?); and
 * estimates of its income, expenditure, and financing. (These estimates should be presented on a gross basis so that it is possible to tell how much money flows through each extra-budgetary fund.)

In most countries, governments engage in certain budgetary activities that are not included in the central government’s budget. Known as extra-budgetary funds, they can range in size and scope. For example, countries frequently set up pension and social security programs as extra-budgetary funds, where the revenues collected and the benefits paid are recorded in a separate fund outside the budget. Another example of an extra-budgetary fund can be found in countries dependent on hydrocarbon/mineral resources, where revenues from producing and selling those resources are channeled through systems outside the annual budget.

In some cases, the separation engendered by an extra-budgetary fund serves a legitimate political purpose, and the finances and activities of these funds are well documented. In other cases, however, this structure is used for obfuscation, and little or nothing is known about a fund’s finances and activities.

The availability of information related to extra-budgetary funds is essential for a comprehensive understanding of the government’s true fiscal position. In addition to the core information, other information about extra-budgetary funds is also desirable. Such information includes a discussion of the risks associated with the extra-budgetary fund; expenditures classified by economic, functional, or administrative unit; and the rules and procedures that govern the operations and management of the extra-budgetary fund.

For more information about extra-budgetary funds, see the Guide to Transparency in Public Finances: Looking Beyond the Core Budget and Principle 2.1 of the IMF’s Fiscal Transparency Handbook (2018).

To answer “a,” the Executive’s Budget Proposal or supporting documentation must present all of the core information related to extra-budgetary funds as well as some additional information beyond the core elements. A “b” answer applies if the Executive’s Budget Proposal or supporting documentation presents all of the core information. A “c” answer applies if some information related to extra-budgetary funds is presented, but some of the core pieces of information are not included. Answer “d” applies if no information is presented on extra-budgetary funds.

1) The case of Sweden in OBS 2017
Are guarantees considered extra-budgetary funds? No. See discussion from Sweden’s researcher, PR, and IBP. In that case, guarantees were considered as a contingent liability, rather than an extra-budgetary fund.

2) The case of Georgia in OBS 2019
In Georgia, there is one extra-budgetary fund – the Partnership Fund. In the EBP, all the core information (purpose of the fund, policy rationale and complete income, expenditure and financing data) is available, but only for 2012-2017 (the EBP we are evaluating is from FY2019).

This is not recent enough to choose a “c” answer for this question, so we assessed this question as "d" and explained in the comments that past info is available.

External References

 * IBP’s Guide to Transparency in Public Finances: Looking Beyond the Core Budget, (p.4-10)
 * IMF’s Fiscal Transparency Handbook (2018), Principle 2.1