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Transparency in Government Budgets

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Practice Advice on Public Financial Management

Transparency in Government Budgets (OECD)

Summary Advice: The OECD has advised on a number of best practices that governments should follow to ensure that budgets are comprehensive, transparent, and trustworthy.

Main Points: The budget is the government’s key policy document. The OECD defines budget transparency as the full disclosure of all relevant fiscal information in a timely and systematic manner. Several of the best practices identified by the OECD as important for ensuring the transparency of government budgets are:

  • Budgets should be comprehensive, encompassing all government revenue and expenditure, so that the necessary trade-offs between different policy options can be assessed.
  • The government’s draft budget should be submitted to Parliament far enough in advance to allow Parliament to review it properly. In no case should this be less than three months prior to the start of the fiscal year. The budget should be approved by Parliament prior to the start of the fiscal year. 
  • The budget, or related documents, should include a detailed commentary on each revenue and expenditure programme.
  • Non-financial performance data, including performance targets, should be presented for expenditure programmes where practicable.
  • The budget should include a medium-term perspective illustrating how revenue and expenditure will develop during, at least, the two years beyond the next fiscal year. Similarly, the current budget proposal should be reconciled with forecasts contained in earlier fiscal reports for the same period; all significant deviations should be explained.
  • Comparative information on actual revenue and expenditure during the past year and an updated forecast for the current year should be provided for each programme. Similar comparative information should be shown for any non-financial performance data.
  • If revenue and expenditures are authorised in permanent legislation, the amounts of such revenue and expenditures should nonetheless be shown in the budget for information purposes along with other revenue and expenditure.
  • Expenditures should be presented in gross terms. Ear-marked revenue and user charges should be clearly accounted for separately. This should be done regardless of whether particular incentive and control systems provide for the retention of some or all of the receipts by the collecting agency.
  • Expenditures should be classified by administrative unit (e.g. ministry, agency). Supplementary information classifying expenditure by economic and functional categories should also be presented.
  • The budget should include a discussion of tax expenditures.
  • The budget should contain a comprehensive discussion of the government’s financial assets and liabilities, non-financial assets, employee pension obligations and contingent liabilities.

Source: OECD (2002). Best Practices for Budget Transparency at (accessed 24 September, 2012).

Page Created By: Ben Eisen on 15 October 2012. Updated by Ian Clark on 4 January 2013. The content presented on this page is drawn directly from the source(s) cited above, and consists of direct quotations or close paraphrases. This material does not necessarily reflect the official view of the publishing organization.

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