Pillar Four: Policy-based fiscal strategy and budgeting
PI-14. Macroeconomic and fiscal forecasting
Description
This indicator measures the ability of a country to develop robust macroeconomic and fiscal forecasts, which are crucial to developing a sustainable fiscal strategy and ensuring greater predictability of budget allocations. It also assesses the government’s capacity to estimate the fiscal impact of potential changes in economic circumstances. It contains three dimensions and uses M2 (AV) for aggregating dimension scores.
Dimensions and scoring
| Score | Minimum requirements for scores |
|---|---|
14.1. Macroeconomic forecasts |
|
| A | The government prepares forecasts of key macroeconomic indicators, which, together with the underlying assumptions, are included in budget documentation submitted to the legislature. These forecasts are updated at least once a year. The forecasts cover the budget year and the two following fiscal years. The projections have been reviewed by an entity other than the preparing entity. |
| B | The government prepares forecasts of key macroeconomic indicators, which, together with the underlying assumptions, are included in budget documentation submitted to the legislature. These forecasts cover the budget year and the two following fiscal years. |
| C | The government prepares forecasts of key macroeconomic indicators for the budget year and the two following fiscal years. |
| D | Performance is less than required for a C score. |
14.2. Fiscal forecasts |
|
| A | The government prepares forecasts of the main fiscal indicators, including revenues (by type), aggregate expenditure, and the budget balance, for the budget year and two following fiscal years. These forecasts, together with the underlying assumptions and an explanation of the main differences from the forecasts made in the previous year’s budget, are included in budget documentation submitted to the legislature. |
| B | The government prepares forecasts of the main fiscal indicators, including revenues (by type), aggregate expenditure, and the budget balance, for the budget year and two following fiscal years. These forecasts, together with the underlying assumptions, are included in budget documentation submitted to the legislature. |
| C | The government prepares forecasts of revenue, expenditure and the budget balance for the budget year and the two following fiscal years. |
| D | Performance is less than required for a C score. |
14.3. Macrofiscal sensitivity analysis |
|
| A | The government prepares a range of fiscal forecast scenarios based on alternative macroeconomic assumptions, and these scenarios are published, together with its central forecast. |
| B | The government prepares, for internal use, a range of fiscal forecast scenarios based on alternative macroeconomic assumptions. The budget documents include discussion of forecast sensitivities. |
| C | The macrofiscal forecasts prepared by the government include a qualitative assessment of the impact of alternative macroeconomic assumptions. |
| D | Performance is less than required for a C score. |
