Greater Transparency Needed in Government Spending

Many developing countries have serious deficiencies when it comes to providing accurate, timely and accessible information on how their national budget is allocated and spent, leaving an open-door to abuse and corruption, say the International Budget Partnership.

According to a study of 94 countries, the IBP found that 74 failed to publish transparent budget information with 40 of those releasing no meaningful budget information at all.

The authors of this bi-annual study, The Open Budget Survey which was published in October, claims that without this information it is difficult for the public or oversight institutions to hold governments to account on how public resources are spent.

“The budget is the government’s most important policy instrument, it affects the lives of all people in the country but especially those of the poor,” said Vivek Ramkumar, one of the authors of the study. “In those countries where the public has access to information, it increases the opportunities people have for holding their government to account on the promises made in their budgets.”

“Budget transparency is centrally linked to the development needs of the poor,” Mr Ramkumar added.

To watch a video interview with Mr Ramkumar and his colleague Warren Krafchik, Director of IBP, click on the icon below:

According to the study, the countries with least budget transparency were mostly in Africa and the Middle East – regions heavily supported by donors - with the worst offenders typically resource rich nations.

The IBP is concerned that donors are sending a mixed message to their partner countries: Demanding aid transparency and adherence to public finance management reform without sufficiently creating the link to budget transparency.

IBP recommends that donors need to agree on a set of norms and draw up some criteria of what budget information governments should be producing and publishing. And with much agreement existing already between the OECD, World Bank and International Monetary Fund, as well as at the level of the International Organisation of Supreme Audit Institutions (INTOSAI), this is a recommendation that lies within reach, say the IBP.

First launched in 2006, the Open Budget Survey rates each of the countries surveyed according to internationally recognised criteria against a 100-point scale called the Open Budget Index.

This rating also takes into account the strength of formal oversight institutions – national legislatures and external auditors – for overseeing budget implementation. Budget transparency is a key element for improving domestic accountability argued Mr Krafchik, of IBP during the European Development Days, held in December 2010 in Brussels. There, he highlighted that civil society organisations should work with national audit institutions, parliament and other overseeing institutions to promote transparency and accountability.

If we’re talking about improving service delivery, we have to talk about an accountability system that works opposite the government. And that accountability system has civil society as a major player,” said Mr Krafchik. “But it also has parliament, it has supreme audit institutions, it has the media and it has the judiciary. And I think when you talk about accountability, you need to talk about how this package, how this set of five actors interact."

Looking at the trends picked up in the last three studies, the IBP’s findings are not all bad. The 2010 report found that the 40 countries followed through the three bi-annual reports are slowly improving and some countries, like Liberia and Mongolia, have achieved a marked improvement in budget transparency – albeit from a very low base.

For some of those studied, huge improvements in transparency can be made by publishing some or all of the information governments are already preparing for their internal consumption or for donors.

“The good news is that all governments – no matter their income levels or political systems or dependence on aid – can improve transparency and accountability quickly and with very little additional cost or effort by publishing online all of the budget information they already produce,” said Warren Krafchik, Director of IBP, “and by inviting public participation in the budget process.”

The IBP tries to make their findings as uniform as possible.

However, reports are based on government figures, which, if they are released, are analysed by local budget experts before being sent for review at the IBP headquarters in Washington DC. The different government’s reporting procedures, the quality of the different local experts all contribute to making IBP’s goal of consistency more difficult.

Governments are given a right of reply before the country report is finalised by IBP referees, but not all governments take up the opportunity to comment.