Essay on Fiscal Transparency of United Arab Emirates

Introduction

Fiscal transparency defined as the reliability, frequency, clarity, timeless and relevance of fiscal reporting and openness to the public. The government’s fiscal policy creation process is an important element of managing fiscal policies effectively. Fiscal policy transparency assists governments to ensure informed economic decisions made, and accurate assessments of present fiscal positions. It guides in effective assessments of costs, policy changes and potential risks of the fiscal outlook.[1]

Fiscal transparency provides legislatures, market stakeholders and a nation’s citizen in making efficient financial choices. It empowers respective stakeholders to hold their governments accountable for their fiscal performance and utilization a nation’s resources. Finally, this transparency facilitates international supervision of fiscal developments and guides mitigation of fiscal spillovers among countries.[2]

Clear roles and responsibilities

This section discusses fiscal transparency principles and practices that concern the scope and fiscal management framework of a government. They are crucial for assigning accountability to the design and implementation of various fiscal policies. The identification of government entities that provides goods and services to the public, thereby, empowering the public domain to understand the true scope of their governments. Such is because; clear roles and responsibilities assigned through legal and administrative frameworks that ensure a governments use and collection of the public’sresources are met with accountability and good governance[3].

The government sector should differentiate the public sector and the rest of the economy and policy management roles concerning the public should be clear and effectively disclosed. With the adaptation of the code of Good practices on fiscal transparency, the United Arab Emirates have safeguarded their implementation. This proven through adoption of good practices regarding governmental structures and functions, executive legislative and judicial roles of the government branches; responsibilities of distinguished government levels; generated relationships among government agencies and public corporations; finally governments participation and involvement in the private sector.

The adoptions of these principles within the emirate states ensure; published institutional tables that clearly identify the structure of the government and public sectors. In addition, the various levels of government and corporations held publically. They explain all quasi-fiscal activities, lastly, give clear assignments of revenues and responsibilities to all distinguished government levels.

Government structures and functions must be clear means; the public sector is made up of the general government and public organizations. The two types of public corporations entail financial corporations such as the central bank and other nonmonetary financial firms and non-financial public organizations. Through the separation of government functions from monetary and commercial practises.it provides room for to establish accountability.

For examples in the United Arab Emirates, identification of some government entities is somewhat difficult. This is because there may be entities with separate legal identities and autonomy from the executive thereby leading to the discretion of their expenditures and sources of revenue via earmarked transfers. Such entities are non-market and profit institutions that should entirely be include in the operations of the government.

Fiscal powers and roles of the executive, legislative and judicial branches within the Arab states are underway if not already clearly defined. With the adoption and utilization of guidelines of the Code, all government branches entitled to fiscal management should be well defined. This is because relationships amongst different branches of government vary and are often face changes with the development of political and administrative systems. Recent studies echoed this through illustrations of the importance and influence budget organizations have on fiscal outcomes. For example, the executive arm given the objective to conduct fiscal policy for budget within a given fiscal year, but the budget yet adopted by the legislative arm of government to which it relates. However, the budget should be availed publicly so that the citizens of that respective state hold each branch accountable for their participation in the budget process.[4]

Full provision of information

With the recent economic and financial crisis such as those experienced in the United Arab Emirates, it brought about the need to reassess international efforts concerning promoting fiscal transparencies among states. The crisis experienced revealed that even among advanced economies like that of the united emirates, there was inadequate understanding of their current fiscal positions. As proven by the emergence of unrecorded economic deficits and debts.

The crisis demonstrated that countries had undermined the risks involved toward their fiscal prospects, especially through underestimation of those arising from the financial sector. The deterioration of fiscal stances that resulted to the emergence of the crisis and need for fiscal adjustments, increased governments participation in incentives that gave rise to true activities that reflect upon their true financial states, with respect to their nations. Therefore, a revitalized international fiscal policy effort is critical to prevent the resurgence of similar crises.

Open budget process

Information presented in the budget documentation process related in accordance with fiscal policy transparency. Without exception, in any Arab emirate state, the annualbudgets are the main instrument for their respective governments to set fiscal policy. It is during this period the government presents expenditure proposals and through which means it shall finance them. It shall accomplish with extreme care within the context of policy and explicit statements made highlighting their intentions. Alongside the government allocations in spending, the legislature is provide with needed information from the administrative unit that shall aid in the scrutiny and approved spending accorded in the budget. On the other hand, the government uses budget proposals for revenue collection and borrowing activities meanwhile providing explanations on how the suggested proposals will help to guide and achieve required objectives .These objectives are crucial to the economic stability of the state in context.

Information provide during annual budgets in the united Arab emirates over the past five years cover all fiscal activities irrespective of the institutional setting it took place. The government makes it possible to review the allocated resources in accordance with the announced policy objectives by highlighting elements such as tax expenditures, quasi-fiscal activities and other extra budgetary funds that may be include during budget presentation. This type of fiscal policy transparency entailing functional and economic presentations, whichboth conducted publically, give room for questioning and clarity hence promote transparency of governmental activities.

Assurances of integrity

Fiscal data reported to the government pass via basic criteria to attest their quality is essential for fiscal transparency. Such implementations have increased in the United ArabEmirates that provide assurances to the legislature and public by placing data integrity mechanisms. For example, internal oversight mechanisms implemented to oversee internal audits, procurement, public service employment, the sale and purchase of public assets. External oversight mechanisms promote assurances of integrity via external independent audit bodies and the engagement of national independent experts.

Fiscal data to ascertain it has met quality standards good practices relating to data consistency and reconciliation, realism of budgeted data and finally, accounting standards, need to be upheld. Requirement principles under assurances of integrity include; Countries should adhere to Special Data Dissemination Standards and aggregated fiscal outcomes are compared with previous forecasted data. It is necessary for budget estimates and forecasts to take into account information present at the time, including latest economic projections and recent evidence outlook on financing, spending and revenue.it is import ant to note that during budget revisions, Emirate states have recently adopted to giving explanations that ensure integrity during the forecasting process. Therefore, effects of policy changes should be clearly distinguished.

Annual budgets and final accounts need to indicate accounting basis applied in the compilation of fiscal data. Fiscal transparency entails these policies are met and referenced. Revisions made in accounting methodology should be disclosed. Reasons for this is to facilitate comparability in between the years revised. Advanced notices given to the public lime light if significant planned changes made. Best practices entail setting mechanism standards for financial reporting and government accounting.

Bibliography

Arthur, Anent. (2000). “General and Specific Methodologies for Valuing Contingent

Liabilities,” Contingency Fund Project Report, Arthur Anderson, unpublished.

Carson, Collins. (2001). “Towards a Framework for Assessing Data Quality,” IMF WP/01/25

(Washington: International Monetary Fund).

Hameed, Farlor. (2005). “Fiscal Transparency and Economic Outcomes,” IMF WP/05/225

(Washington: International Monetary Fund).

Parry, Thomas. (2003). Fiscal Transparency in EU Accession Countries: Progress and Future

Challenges,” IMF WP/03/163 (Washington: International Monetary Fund).

[1] Arthur, Anent. (2000). “General and Specific Methodologies for Valuing Contingent Liabilities,” Contingency Fund Project Report, Arthur Anderson, unpublished.

[2]Carson, Collins. (2001). “Towards a Framework for Assessing Data Quality,” IMF WP/01/25 (Washington: International Monetary Fund).

[3] Hameed, Farlor. (2005). “Fiscal Transparency and Economic Outcomes,” IMF WP/05/225 (Washington: International Monetary Fund).

[4] Parry, Thomas. (2003). Fiscal Transparency in EU Accession Countries: Progress and Future Challenges,” IMF WP/03/163 (Washington: International Monetary Fund).