By Nick Mann | 22 June 2012

Governments need more frequent and better fiscal information to make the right spending and budgeting decisions, the director of fiscal affairs at the International Monetary Fund said yesterday.

Speaking at an event in London, Carlo Cottarelli said: ‘Comprehensive, clear and timely information is necessary for good fiscal policy making and for governments to get a better understanding of their real-time financial situation. The frequency and timing of data from many countries are insufficient, the quality of data produced is not good enough and fiscal forecasting is lacking.

‘While the temptation may be to become less transparent in a crisis, we know that fiscal transparency is linked to fiscal performance.’

Christophe Kamps, head of the fiscal surveillance sector at the European Central Bank, added that more needed to be done to assess how problems outside the public sector could affect budgets. Speaking at the same event, organised by the Institute of Chartered Accountants in England and Wales, Kamps said: ‘The crisis has shown how poor our frameworks for assessing risk are. We have seen how contingent liabilities have become explicit public debt. In some euro-area countries the problems didn’t build up in the public sector yet have become very important factors for the planning of public budgets.’

ICEAW president Mark Spofforth added that governments could balance growth strategies with deficit reduction only if they were clear on their fiscal positions.

‘High-quality, transparent financial information is closely linked to confidence and trust, without which investors are reluctant to part with their money and the cost of finance increases. Governments, like businesses, must deliver transparent, high-quality financial information in a timely manner,’ he said.