Both the 2006 Oxford Analytica (OA) Fiscal Transparency report and the International Monetary Fund's 2003 and 2005 Reports on the Observance of Standards and Codes (ROSC) on fiscal transparency found that Chile has achieved high fiscal transparency, although both found areas in which improvements could be made. OA awarded an overall assessment of "Compliance in Progress" to Chile, recognizing the country's ongoing efforts underway to improve and enhance transparency practices. Both the IMF and OA also express approval of Chile's use of the "structural surplus rule," by means of which Chile has been able to maintain a strong and successful fiscal policy stance. The 2008 IMF Article IV Consultations with Chile disclose that the country's approach to fiscal policy has contributed to its ability to withstand recent external shocks such as spiking fuel and food prices and the turmoil occasioned by the global credit crunch.

General Overview

The most recent Oxford Analytica (OA) Fiscal Transparency report on Chile, published in late 2006, rated Chile's overall performance as "Compliance in Progress," adding that "Chile enjoys an efficient and transparent fiscal policy framework, in line with international standards, together with a robust financial system" (p. 52). Chile is a subscriber to the Special Data Dissemination Standard (SDDS) of the International Monetary Fund (IMF) and has met SDDS specifications since 2000. OA notes that legislative changes, including the newly approved Fiscal Responsibility Law of 2006, have added to the fiscal transparency framework, requiring each new government administration to define its fiscal fundamentals within the first 90 days in office. There is a provision requiring regular monitoring of fiscal sustainability, and a legal requirement that the Budget Directorate of the Ministry of Finance (MdH) report annually on contingent liabilities and fiscal risks. The OA report adds that Chile follows the IMF's Government Finance Statistics Manual of 2001 (GFSM2001) in disseminating its fiscal information, although complete transition to the GRSM2001 is still a work in progress. There is increasing coverage of municipal and extra-budgetary transaction data, but OA finds that Chile continues to omit coverage of some of its military activities in the budget documents. OA adds that Chile has made progress in eliminating inconsistencies across agencies with regard to methodology, coverage, and periodicity of its fiscal data, and that the Budget Directorate has made great strides in pulling together and systematizing data that had, in the past, been dispersed across a variety of sources. According to OA, this has had the effect of "increasing fiscal policy efficiency in the allocation of resources" (p. 52). OA also singled out for praise Chile's "consolidation of a performance-based budgetary system" (p. 52), which has been applied to in excess of 176 public services, as a means by which to enhance departmental understanding of the need to comply with budget objectives. OA warned that although the Office of the Comptroller General is considered to be independent, this status needs strengthening. Weaknesses in the practices of the National Statistics Institute (INE) are being addressed. Finally, OA reported that concerns remain with regard to the governance of public enterprises.

In 2003, the IMF conducted Fiscal Transparency Modules for its Report on the Observance of Standards and Codes (ROSC) and followed up with a ROSC update in 2005. The 2003 ROSC found Chile to have achieved high fiscal transparency, principally in evidence by the clarity of the government's presentation of its macro-level and program-level objectives. Chile implements a structural balance rule that inspires confidence in the public and the markets, and its performance-based assessment of the budget is well developed. The 2003 ROSC added that government accountability was being strengthened, reporting was being enhanced, and the government was encouraging greater expert input from outside the government, along with the development of a healthy debate of fiscal and broader economic policy concerns being conducted in media venues. Many of the strengths mentioned in the 2006 OA report were echoed in both the 2003 and 2005 IMF ROSCs, and the 2005 ROSC particularly applauded the move to adopt GFSM2001.

The 2008 IMF Article IV Consultations with Chile disclose that the country remains committed to a "prudent, rules-based macroeconomic policy framework" and credits this commitment with delivering "important economic and social rewards" (p. 5), including ongoing economic stability, even as the country is in the midst of a copper boom. The economy has thus far avoided overheating. However, external shocks such as the recent worldwide spike in food and energy prices and the global credit crunch have added inflationary pressures that have had some negative implications for growth. The IMF finds that Chile continues to enjoy an "exceptionally strong" fiscal position (p. 7), and projects a fiscal surplus of nearly 8% of GDP for 2008. Major pension reform legislation was passed by Congress in 2008, but future reform projects may not be easily achieved, given current political conditions. The next presidential elections are slated for 2009. Current fiscal policy includes a reduction in the surplus target to 0.5% of GDP, which has spurred economic activity to a moderate extent. Other stimulus efforts include "targeted assistance to workers in certain export areas" and small "one-off cash transfers" to the nations poorest 40% and low-income pensioners. Additionally, the government has implemented a two-year gas tax reduction to help offset rising fuel prices and has added $200 million to the fuel stabilization fund. This last is a temporary measure which has since been supplemented by an additional $1 billion, and has enabled the fund to bring about a 10% cut in fuel prices at the pump and cover the cost of transitioning some electricity generation to diesel rather than gas and hydro power. According to the 2008 IMF report, "the authorities emphasized that the focus of fiscal policy will be on quality and efficient implementation of spending programs" (p. 13).

The Principles

Clarity of roles and responsibilities.

CP

According to the 2006 OA Fiscal Transparency report for Chile, the country receives a rating of "Compliance in Progress" for this principle, unchanged from the previous year. OA notes that the legislative framework underpinning Chile's fiscal policy framework comprises, first of all, the 1980 Constitution as amended in 2005, the Organic Constitutional Law of General Principles for Administration of the State of 1986, the Organic Decree-Law of the Financial Management of the State (Law No. 1,263) of 1975, and the Fiscal Responsibility Law of 2006. OA finds that these laws provide clear definition of the allocation of roles across the different levels of government, as well as providing appropriate clarity as to the interrelationships among and between governmental entities. The structure of the Chilean state is that of a "unitary decentralized republic" (p. 53), in which the powers of the executive, legislative, and judicial branches are clearly distinguished. There are 13 regional governments and a variety of "autonomous and independent" public entities, including the Central Bank of Chile (BCCh), the Superintendency of Banks and Financial Institutions (SBIF), the Attorney General, and the Office of Comptroller General. OA notes that, per the Budget Law, fiscal data coverage and its dissemination follows the standards set by the GFSM2001. Capital flow data is dealt with according to accrual-based accounting rules. However, the implementation of GFSM2001 was not yet complete at the time of the OA report, and was expected to continue into 2007. OA reports that the Constitution provides clear definition of the relationships between regional and national government bodies. Below the regional level are the provincial and, lower still, the municipal government entities. Municipalities are "managerially and financially autonomous" (p. 54), according to OA, and as such are excluded from coverage under the Budget Law. Nonetheless, OA reports that they comply with the provisions of Law No. 1,263 and require the authorization of the MdH in order to issue debt. Two laws explicitly address the powers of taxation allocated to the sub-national governmental levels: the 1987 Organic Law of Regional Councils and the 1993 Organic Law of the Municipalities, as amended. Municipal tax revenues are redistributed from the wealthiest to the less wealthy by means of the newly redesigned Municipal Common Fund, in order to render the redistributive process more efficient.

According to OA, Law No. 1,263 provides the framework by which the Chilean budget is to be managed. It incorporates unified budgeting. The MdH's Budget Directorate drafts the budget according to a schedule set forth by the MdH and has the additional responsibility of budget implementation. OA notes a problem with regard to the Directorate's ostensible independence when it states that "although formally reporting to the [MdH], the budget director is appointed directly by the president, who may dismiss him at any time" (p. 55). Excluded from the Directorate's reporting are the budget data of Chile's universities and research institutes, as these are not subject to congressional approval. Amendments to Law No. 1,263 have enhanced both transparency and disclosure, according to OA. Debt limits for the central government entities are set in the annual budget law, whereas the MdH approves grants and external loans for public institutions. Budget execution, accounting, and auditing of public funds are the responsibility of the Office of the Comptroller General. Copper revenues, under the authority of the state-owned CODELCO, are now publicly accounted for by law, and CODELCO's gross revenues are now included in fiscal revenues. Reporting on revenues and expenditures relating to copper and oil constitutes a special case in Chile, and in the past there have been inadequacies in the coverage of this data. However, OA reports that "the 2006 edition of the Public Finance Report has enhanced the availability of information" of the three significant copper-related government funds: the Copper Revenue Compensation Fund, the Oil Compensation Fund, and the Infrastructure Compensation Fund. Reporting follows the guidelines established in GFSM2001. OA finds that these enhancements have improved the clarity of such reporting. OA adds that the adoption of performance-based budgeting has improved understanding across the government of the need for compliance with budget objectives. Fiscal management has been improved by Chile's counter-cyclical fiscal policy stance, enabled largely by Chile's success in gradually reducing public debt.

OA reports that the BCCh is constitutionally independent of the government. Except in emergencies, the BCCh cannot extend loans to the government, nor can it transact with entities of the non-financial private sector. The debt incurred by the BCCh when it assumed public debt and bank assets during the crisis of the mid-1980s has been significantly reduced through recapitalization and the application of significant prepayments enabled by fiscal surpluses in 2005 and 2006. OA judges that the BCCh is on track to meet the government's goal of cancelling the remainder of the debt by 2014. The Constitution also provides for the independence and administrative autonomy of the SBIF. The SBIF's executive director is appointed by the Chilean president. It is empowered to authorize the formation of new banks and to enforce banking regulations. However, OA notes that there have been "a number of corruption scandals" (p. 55) in the sectors under SBIF authority, which points out the need for greater coordination within Chile's regulatory bodies.

OA also reports that a number of laws govern the role of government in both commercial and non-commercial endeavors. Congressional approval is required before new public enterprises may be created or existing enterprises can take on new activities. Oversight of the government's commercial activities is provided for by both legislation and other regulatory standards, and the activities of such enterprises are reported through their balance sheets and financial statements. Quasi-fiscal public enterprise operations are also publicly reported. State-owned enterprises (SOEs) are subject to supervisory provisions depending on their type. Enterprises covered under the Production Development Corporation, which include healthcare, the national lottery, the coal industry, and service providers, are managed under the System of Public Enterprises, and must submit semi-annual financial reports for scrutiny by the Congress. The funds provided to these enterprises must be accounted for in the annual Budget Law. The other principal category of SOE is that in which the government possesses majority ownership. CODELCO is a primary example of this type of SOE. These enterprises have their own budget process, but are subject to the approval of the MdH. To overcome public dissatisfaction with the management of certain public enterprises, such as CODELCO, the government has made some attempt at reform, but its most recent attempt was blocked in Congress. OA also notes that there is a need to enhance governance of Chile's public-private partnerships "in order to safeguard the budget from undue exposure to contingent liabilities" (p. 56). Finally, the BCCh regulates Chile's few public financial institutions - the supervision of these institutions falls to the SBIF.

According to the OA report, the legal framework for budgetary activities in Chile is underpinned by the Constitution, which requires that the MdH present the annual budget bill to the Congress. The power of the Congress is limited to the reduction or elimination of proposed expenditures. Upon receipt of the budget presentation, the Congress has 60 days to hold a vote, after which the Budget is automatically enacted. Prior to budget presentation, the MdH is required by law to solicit the individual draft budgets of all government ministries, agencies, and regional governments. The resultant budget document includes all of this information, as well as a financial statement covering the execution of the prior year's budget, the financial arrangements necessitated by the current year's fiscal goals, and a statement of medium-term financial plans. The MdH is empowered to "review and authorize any actions that would require future disbursements" (p. 57) the report added. It can refuse to authorize certain expenditures and can propose certain increases for congressional approval. According to OA, a law passed in 2003 (Law No. 19,896) had the effect of making permanent certain legal provisions that had previously been subject to year-by-year inclusion in the annual budget law. This law also requires the annual publication of a "Public Finance Report" and specifies the information that must be included therein. The 2006 Fiscal Responsibility Law explicitly addresses transparency issues and management procedures. The tax law gives the government no discretionary powers. Two agencies, the Internal Tax Service (ITS) and the National Customs Service (NCS), are tasked with the management of taxes and tariffs/duties, respectively. Tax revenues are under the authority of the Treasury. Coordination across these agencies is handled by a permanent commission that is directed by the head of the ITS. Legal protection shields both the ITS and NCS from political interference. The legal framework for taxation is, according to OA, "relatively simple" (p. 58). In 2006 the ITS proposed a "Taxpayer Rights" resolution to further simplify the tax law in order to make it more efficient. Electronic tax filing and payment is possible, and the NCS is moving toward electronic tracking of imports. The tax code clearly elaborates both taxpayer rights and the arbitration process. According to OA, newly introduced legislation "would guarantee the independent selection of tax judges: (p. 57).

Finally, provisions of the Law No. 18,834 address the issue of ethical standards in public service. The law sets forth supervisory controls and a code of conduct for employees in the public sector, standards of probity and confidentiality, and establishes the procedures for and obligation to report violations. Legislation passed in 2006 requires that holders of high public office, members of parliament, and members of the electoral and Constitutional courts must make detailed reports of their assets in writing and under oath, and must update them every four years. Such reports are made available to the public. If an official is transferred to a new office, he or she must file a new report at the time of such transfers.

Open budget processes

FC

The 2006 OA report accords Chile "Full Compliance" (p. 61) on this principle. According to OA, the Public Finance Statistics (PFS) yearbook provides a full statement of Chile's fiscal policy objectives, along with its medium-term policy goals and priorities looking forward three years. The PFS also includes an explanation of any changes adopted in the fiscal rules and any budget reallocations that may have taken place over the prior three years. A distinction is made between existing commitments and newly adopted policies. A further distinction is made between "inertial" and "incremental" spending. Only after "inertial" spending is subtracted from the budget, is a figure arrived at from which proposed outlays may be funded. Spending proposals must include a statement of goals, expected outcomes, and other relevant data. The annual budget is drafted within the context of the medium-term fiscal framework, which looks three years forward. The assumptions underlying the budget are publicly disclosed. The MdH is tasked with the presentation of the budget proposal to the Congressional Special Budget Commission. Included in this presentation are macroeconomic forecasts, which are also published in the PFR yearbook. In the month prior to the MdH's presentation, the BCCh is required to report to Congress on its inflation targets along with its own macroeconomic forecasts. The 2006 Fiscal Responsibility Law mandates that annual fiscal risk analyses be presented by the Budget Directorate according to a more systematic methodology than was employed in the past.

OA reports that there are two principle elements of the MdH's budget document: a structural balance target and a medium-term financial projection. OA states that "fiscal sustainability is monitored on a regular basis" (p. 61). Chile employs methodological guidelines established by the IMF and the Organization for Economic Co-operation and Development (OECD) in determining its revenues and expenditures. However, OA notes that the BCCh and public enterprise balances are not included in this methodology. According to OA, "the structural fiscal surplus methodology has increased transparency and accountability by defining a specific medium-term fiscal policy path, that removes policy discretion while not suppressing automatic stabilizers" (p. 62). Also contributing to fiscal transparency and credibility is the practice of consulting with panels of experts in order to determine any needed cyclical adjustments. OA notes that the 2006 Fiscal Responsibility Law also improves transparency and predictability through its provisions that deal with the structural balance framework, whereby every incoming administration must declare its fiscal fundamentals during its first 90 days in office. OA adds that this initial declaration can be modified if necessary, as long as any such modifications are disclosed to the Congress. When developing its medium-term forecasts, the government consults closely with independent experts, according to OA, and it publishes both the roster of its consultants and the results of their consultations, making this information available to the general public. This consultation with outside experts is cited by OA as "a key component in ensuring the transparency and credibility of the fiscal policy rule" (p. 62).

OA reports that the MdH makes its Budget Bill available in October of the pre-budget year. The Bill provides details of its fiscal targets and policies. Once approved, the budget is published, including a statement of its appropriations and its cash plan. Quarterly reports on the budget covering central government operations are publicly available. Also available to the public are prior year budgets and reports on their execution. According to OA, the Budget Directorate "provides clear guidelines on submitting budget initiatives for public institutions" (p. 63). Budget reporting includes a presentation of individual program objectives, which are linked to performance indicators. OA calls the procedures for performance evaluation "highly developed in the budget presentation" (p. 63). Both the Budget Directorate and the Office of the Comptroller General are working to implement a unified methodology for evaluating budget performance, known as the State Information System of Financial Management. This should permit a more integrated check-and-balance process and thus enhance the ability to monitor spending. It should also improve both the quality and reliability of budget data. OA reports that, as of 2006, 90% of the central government's departments have adopted the new system. According to OA, the Budget Directorship posts the results of its monthly budget execution regulatory activities. All of the public service agencies are assessed on their performance, and the results are documented in the budget. Expert panels are included in the evaluation process regarding budget programs, and their recommendations are taken into account when major program redesign or institutional changes are contemplated. All such assessments are reported to the Congress and are made available to the general public.

OA reports that the Budget Directorate "is committed to scrutiny and evaluation of government programs in order to maximize budgetary allocations" (p. 64) and in recent years has improved its public disclosure of such evaluations on the Directorate's website. The Directorate cooperates with the responsible public institutions to deal with any program deficiencies disclosed by such scrutiny. However, OA notes that there have been concerns expressed in recent years as to the actual follow-up in such cases. Nonetheless, OA does applaud certain recent improvements, particularly in the development of socioeconomic performance indicators, which it calls "an important element in the country's fiscal framework" (p. 64). These are developed collaboratively, involving inputs from the MdH and relevant government agencies. They are published according to pre-set guidelines and on a specified schedule that is announced on the Directorate's website. The Public Finance Report (PFR) yearbook includes an elaboration of the prior year's performance indicators, including their rates of fulfillment. OA finds that the system of performance indicators has shown steady improvement since it was first adopted in 2001. The Directorate is also developing a System of Management Control and Results-Based Budgeting which aims to improve efficiency in the public-spending process. There have been improvements, as well, in the electronic database upon which budget assessments are founded. OA notes that this ambitious new system has been praised by the World Bank for its contribution to improved financial management and professionalism in the fiscal process. Results generated by this system are made available to the public. Other recent improvements cited by OA include an ongoing effort to consolidate the various management improvement programs instituted by individual agencies within the public sector, and information on this initiative is also increasingly being made available to the public. The Special Budget Commission of Congress has established a protocol with the Budget Directorate to standardize the procedures followed by the management improvement programs, awarding certification to those agencies that successfully fulfill protocol requirements. These requirements are published on the Directorate's website, as is a list of those entities currently working toward certification.

Government accounting principles are established in law, as is the authority of the Office of the Comptroller General to oversee public sector accounts. OA finds that the public sector accounting system is "consistent with international standards" (p. 65). The accounting system not only establishes rules for reporting budget execution but also sets forth the criteria according to which execution is to be monitored. Compliance is incentivized by the provision of an additional 2% budget allocation to the entities that achieve high levels of performance. Fiscal accounting is done according to the GFSM2001's accrual-based system, for the most part. Chile is also moving forward in its efforts to produce a "Statement of Government Operations." However, the government has decided to continue to employ cash-based accounting of its tax revenues.

A variety of laws build on the Constitution's provisions that regulate procurement and public sector staffing and wage setting. Principles of transparency and competitiveness with regard to the awarding of contracts are covered by the Law on the General Principles for the Administration of the State (No. 18,575). OA reports that "allegations over obscure government employment and payment practices are not common, and corruption allegations are usually judicially investigated" (p. 65). With the 2003 passage of the Procurement Law (No. 19,886), procurement procedures were rationalized and an independent Public Procurement Tribunal was created to provide recourse for suppliers who wish to lodge appeals against the procurement process. Information relevant to procurement activity and related legislation is publicly disclosed on the MdH's website. Participation in the civil service, aside from positions to which incumbents are politically appointed, is based on considerations of merit and competition. The 2003 Civil Service Statute created a National Civil Service Directorate and contains provisions aimed at modernizing the civil service and improving its professionalism. Among its provisions, the Statute promotes competition and merit for promotions and offers incentives based on performance. It also creates new standards by which the performance of high-level staff and officers is to be evaluated. The Statute is expected to contribute to a significant reduction in the number of political appointees serving in public office, which should, in turn, help improve productivity.

OA notes that the Budget Directorate issues annual and quarterly reports on fiscal activity, as well as the annual publication of public financial statistics in the first quarter of each year. The annual Public Finance Report includes coverage of the Directorate's reports to Congress. Monthly data on budget execution is available to the public, and there are quarterly updates of revenue and spending data. All the government's reports are updated onto the Directorate website and accessible to the public, and the website is well thought of by its users. OA adds that the Directorate's website recently operationalized its virtual library, which has "further enhanced fiscal reporting" (p. 66). Other improvements in fiscal reporting have arisen from the establishment, in 2003, of a Budgetary Advisory Unit, which reports directly to the Special Budget Commission. The work of the Unit and the Commission is intended to enable Congress to achieve better oversight and control over budget execution during the fiscal year in which it occurs. However, OA cautions that the Commission's capabilities are, as yet, not fully developed.

According to OA, the central government reports to Congress in mid-year as to its financial conduct, through the submission of the Budget Directorate's "Financial Evaluation of the Public Sector." OA reports that this document is "widely acknowledged as a relevant analytical tool" (p. 66) that contains a comprehensive assessment of prior year public sector financial management along with updates to the current year's projections. The adoption of GFSM2001 reporting standards for central government data is credited with improving data quality in these reports. Public enterprise data is regularly reported to Congress as well, as are the results achieved by and impact assessments of major budget initiatives. The Special Budget Commission makes use of outside consultants in its performance assessments of budget initiatives and makes the results available to the press and the public. Finally, the annual Integrated Management Balance Reports, which are submitted to Congress, provides information on the management of all public institutions. These reports are also used by the Budget Directorate when preparing its medium- and long-term assessments. They are published in the Directorate website. OA adds that "the work conducted by the MdH has provided a high degree of homogeneity in the presentation of information, and this enables the comparison of information among different public services" (p. 67).

Public availability of information.

CP

According to the 2006 OA report, Chile has achieved the status of "Compliance in Progress" (p. 58) for this principle. OA found Chile's budgeting process to be efficient, and notes that "the public has access to comprehensive and timely fiscal reports" (p. 58), particularly in the form of the annual Public Finance Report. The report contains a broad range of fiscal information, alongside a presentation of the underlying legal framework and a presentation of any changes in methodology. Both this report and the Report on the State of Public Finances are part of the annual Budget Bill, which offers what OA terms "detailed disclosure of the previous four years' fiscal activity, a three-year forward financial plan, the structural surplus targets, and the assumptions and guidelines used to make the projections"(p. 58). Also included in the Budget Bill is a presentation of the existing general macroeconomic conditions that inform the government's estimate of revenues and expenses. The prior ten years worth of consolidated data on the central and general government, public enterprise and debt, and the nonfinancial public sector are published in the Public Finance Statistics yearbook. OA finds that there have been major improvements in both coverage and quality in the PFS since 2005. The MdH's Budget Directory website offers analyses of "the budgetary impact of legislative government projects within a four-year framework" (p. 58), according to OA. The public's right to this information is ensured through a 2005 amendment to the Constitution, but OA notes that the legislation required in order to clarifying the procedures by which this access must be granted has yet to be passed.

OA notes that monthly, quarterly, biannual, and annual reports on budget execution are produced by the Budget Directorate and made publicly available on its website. The Directorate also produces quarterly and annual reports on central government operations, as well as annual audited balances and quarterly financial statements of all public companies. In addition, there are reports that enable the comparison of budget execution with their relevant budget bill and with performances achieved in prior years. Program execution reports covering central government agencies are issued quarterly. Nonetheless, OA finds that Chile's fiscal transparency could be improved by instituting greater clarity and by more broadly disseminating certain data. Details regarding the state-owned copper enterprise CODELCO remain inadequate, for instance. On the other hand, OA applauds the increased transparency with regard to reporting the government's use of discretionary funds. Improvements have also been made in the way that military revenues and spending are reported, thanks to provisions in the 2006 Financial Responsibility Law.

OA also notes that the Budget Directorate of the MdH reports regularly on the general government, extending its coverage to both municipalities and the decentralized public institutions. OA notes that improvements have been made in the timeliness, periodicity, and quality of municipal data, but observes that more progress could be achieved. Municipal data is published in the PFS yearbook. Both the BCCh and the Office of the Comptroller General report on financial institutions. The government itself issues quarterly consolidated reports of its SOE and provides budget execution information, along with information on its quasi-fiscal operations and contingent liabilities. Annual reports are issued on the nonfinancial public sector data that also include net debt data. Information on contingent debt occasioned by public works projects has been enhanced in recent years and is available in the PFR yearbook.

The IMF's SDDS website discloses that Chile is a subscriber to the standard and has met all specifications since 2000. According to OA, Chilean fiscal data "are generally perceived to be of good quality, and timely and adequate for surveillance purposes" (p. 59). OA also applauds the Budget Directorate's ongoing efforts to "improve the timely disclosure of information, enhancing its frequency and amount" (p. 59). Compliance with GFSM2001 guidelines has improved in the years since 2004 through the adoption of improved methodologies. The newly adopted methodologies are available to the public on the website of the Budget Directorate. OA notes a deficiency in the monthly reporting of extra-budgetary elements, which are not available beyond the central government. However, OA does acknowledge that these data are available on a quarterly and annual basis. The quarterly "Treasury Financial Assets Report," which began publication in 2006, offers public access to what OA terms the "financial aspects of public investment," along with "capital markets participation with detailed information on the allocation of resources both in the country and abroad" (p. 60). Quarterly publication of revenue and expenditure data is available with a 60-day lag, while annual financing data is published with a maximum lag time of three months. Debt reporting is carried out by the MdH and issued quarterly, and the "Public Debt Report" provides such data for the BCCh, the central government, and public enterprises. The PFS yearbook and the "Financial Evaluation of the Public Sector" also report on public sector debt. Provisions of the 2006 Fiscal Responsibility Law has, according to OA, also increased public access to important fiscal data, including data on the military and on the copper industry. Finally, the Budget Directorate makes available on its website a one-quarter-ahead advance release calendar for the actual date of dissemination for data under its authority.

Independent assurances of integrity.

CP

According to the 2006 OA report, Chile has earned a rating of "Compliance in Progress" (p. 68) for this principle. OA notes that Chile's upgrade of its fiscal reporting system is ongoing, and that, since 2006, it has eliminated "differences in methodology, coverage, and periodicity of information among different government dependencies" (p. 67). Recent improvements have thus led to greater accuracy in Chile's financial information. OA reports that Chile has not relied on supplementary budgets since 1975. The Budget Directorate's budgetary data is augmented by the Financial Management Report of the Public Sector published by the Office of the Comptroller General, which also generates an audit report of the Treasury account. A description of the accounting standards used in generating these reports is included. The Directorate provides information on the reconciliation of its fiscal statistics. Also available to the public is a GFSM2001-compliant comprehensive series of fiscal statistics. The government also reports regularly to Congress on its progress in transitioning to an accrual-based system of accounting.

Fiscal management of the public sector at all levels of government is subject to independent audit by the Office of Comptroller General. According to OA, although the Office is institutionally and administratively autonomous, "it is financially dependent on the Budget Law and subject to the budgeting procedures for the central government" (p. 67). The Comptroller General is a presidential appointee, subject to Senate approval, but removal from office can only occur through a congressional action spurred by allegations of infringement of constitutional principles. Among the Comptroller's oversight responsibilities are the legality of transactions undertaken by the administration, Treasury revenues and investments, and the disposition of municipal resources. The Comptroller also develops the system of audits and internal controls. The Comptroller submits its annual Financial Management Report of the Public Sector to both the Congress and the president. This and other annual reports by the Comptroller's office are made available to the public via the Office's website. OA suggests that the capabilities of the Office need to be strengthened and modernized. Citing a joint report issued by the World Bank and the Inter-American Development Bank, OA noted that the Office needs to "improve its annual financial statements, moving to closer adherence with international accounting standards in its reporting and complying with the International Organization of Supreme Audit Institutions principles" (p. 68). The Chilean government submitted a bill to Congress in 2005 that aimed to improve the internal audit process, but OA does not report on the bill's fate. Provisions of the bill would assign a permanent staff to the internal auditing system and grant it autonomy. Other provisions would address the need to establish risk-mitigation measures. In addition, the Office of the Comptroller General would be grated a greater degree of financial flexibility.

OA reports that experts from the private sector and civil society are called upon to participate in discussions about the variables used in the preparation of macroeconomic projections, and that independent criticism of fiscal data is regularly and actively sought, especially with regard to the development of forecasts and the evaluation of public initiatives. According to OA, this practice contributes to both transparency and public confidence in fiscal policy and minimizes the possibility of political interference. The 2006 passage of the Fiscal Responsibility Law created a legal requirement that the government solicit independent analysis of public revenues and spending, along with other provisions flowing from recommendations by external experts and the international community regarding transparency practices. The National Statistics Institute constitutes the core of the statistical regime in Chile. According to OA, the selection of the director and staff is an "open and public process" (p. 69). Core concerns of the INE include quality, technical independence, and transparency. The Budget Directorate and the Office of Comptroller General each perform aspects of fiscal reporting. However, OA expresses a concern that the Directorate's fiscal data reliability is compromised by the agency's dependency on the executive branch. The INE continues its efforts to revise and improve its statistical tools. It publishes socioeconomic indicators on its website for public access. It has begun actively soliciting participants in its Committee of Researchers-Users from both public and private organizations, in order to better conform its practices to user needs. OA reports that the NIS is moving forward in adopting statistical practices that are consistent with those of the OECD, aiming to achieve full OECD compliance by the year 2010.