Legislators and members of Parliament (MPs) play a critical role in budget oversight, passing legislation that have significant economic impact and holding governments to account on behalf of citizens. They are also critical partners in building political support for implementing economic policy. Meetings with MPs help IMF staff better understand the concerns of member countries and to discuss best practices in economic policymaking.
The IMF regularly meets with legislators and MPs in the context of its surveillance activities and by hosting regional workshops. As part of its outreach efforts, the IMF also jointly hosts meetings of the Parliamentary Network of the World Bank and the IMF during the Spring and Annual Meetings. The Fund engages with legislators on such issues as fostering inclusive growth, fiscal transparency and good governance, and energy subsidy reform, among others.
IMF research has shown that persistently high inequality is associated with lower, less durable economic growth and greater financial instability. Fostering inclusive growth requires policies that boost productivity while carefully managing tradeoffs between growth and inequality. In practical terms, that can mean productive infrastructure investment, promoting financial inclusion, and policies that facilitate female labor force participation. Well-designed fiscal policy with progressive taxes and strong social safety nets can help mitigate tradeoffs between growth and inequality.
Fiscal transparency is the publication of reliable, timely information on how governments raise taxes, borrow, spend, invest, and manage public assets and liabilities. It requires clarity, reliability, timeliness, and relevance of public reporting on the state of public finances. It helps ensure that governments have an accurate picture of their finances when making economic decisions and provides legislatures, markets, and citizens with the information they need to hold governments accountable.
Governance and anti-corruption measures:
Corruption undermines the public’s trust in its government. It also threatens market integrity, distorts competition, and endangers economic development. In its surveillance, lending, and technical assistance, the IMF covers economic governance issues that fall within its mandate and expertise, concentrating on issues likely to have a significant impact on macroeconomic performance and the country authorities’ ability to pursue sound economic policies. The IMF assists in strengthening countries’ capacity to combat corruption by advising on appropriate anti-corruption legal frameworks.
Universal energy subsidies have substantial drawbacks. While aimed at protecting consumers, subsidies tend to benefit the rich more than the poor, crowd-out priority public spending, and depress private investment. Subsidies can also encourage excessive energy consumption, artificially promoting fossil fuel industries, reducing incentives for investment in renewable energy, and accelerating the depletion of natural resources. Successful reform to domestic fuel and energy pricing requires a comprehensive strategy. Country experiences suggest the following key elements of effective reform:
(1) phased and gradual price increases;
(s) targeted social spending or essential investment to mitigate the impact of the reform on affected households and firms;
(3) introduction of an automatic pricing formula;
(4) clear communications on the objectives and benefits of reform; and,
(5) accompanying measures to improve the efficiency of state-owned enterprises and service delivery.