The International Monetary Fund (IMF) has emphasized that debt transparency is not only beneficial for individual countries but also crucial for the IMF’s operations.
The IMF noted that hidden and opaque debt forms hinder its ability to fulfill its core mandate.
For instance, collateralized loans, complex financing methods, and confidentiality agreements complicate the IMF’s efforts to accurately assess a country’s debt and aid in economic recovery.
In a publication titled “Hidden Debt Hurts Economies, Better Disclosure Laws Can Help Ease the Pain,” the IMF highlighted its efforts to promote debt transparency through technical assistance and program engagements. The publication stated, “Well-designed laws make it harder to hide debt. However, there are insufficient such laws, despite their proven benefits.
To achieve critical transparency, countries and their international partners must advocate for reforms to enhance domestic legal frameworks, benefiting borrowers, legitimate creditors, and the broader system.
Uncovering hidden debts has never been more important.”
The IMF also pointed out that ineffective oversight by legislatures and supreme audit institutions (national government audit bodies), which are vital for accountability, can impede public debt disclosure.
The Fund urged legislative bodies to monitor and scrutinize public debt on behalf of the people and to have staff capable of understanding highly technical reports.
Many legislatures employ committee systems, such as budget and public accounts committees, to allow for specialization among legislators.
In the United States, for example, the Treasury Secretary must send the annual public debt report to the House Ways and Means and Senate Finance committees, rather than to Congress as a whole.
The IMF also recommended that laws grant supreme audit institutions the authority and necessary powers to monitor and audit government debt and debt operations.
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