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The State of Budget Transparency Worldwide

The State of Budget Transparency Worldwide

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The International Budget Partnership’s Open Budget Survey 2008, a comprehensive evaluation of budget transparency in 85 countries, finds that the state of budget transparency around the world is deplorable. This encourages inappropriate, wasteful, and corrupt spending and—because it shuts the public out of decision making—reduces the legitimacy and impact of anti-poverty initiatives. Weak performers are typically low-income countries that are heavily dependent on donor funding, countries that are heavily dependent on exports of oil and gas, and countries that have weak democracies or autocracies. At the same time, the Survey shows that a number of countries have significantly improved their performance over the past two years. It also shows that many more governments could quickly improve budget transparency at low cost by making available to the public the budget information that they already produce for their donors or internal use.
The International Budget Partnership’s Open Budget Survey 2008, a comprehensive evaluation of budget transparency in 85 countries, finds that the state of budget transparency around the world is deplorable. This encourages inappropriate, wasteful, and corrupt spending and—because it shuts the public out of decision making—reduces the legitimacy and impact of anti-poverty initiatives. Weak performers are typically low-income countries that are heavily dependent on donor funding, countries that are heavily dependent on exports of oil and gas, and countries that have weak democracies or autocracies. At the same time, the Survey shows that a number of countries have significantly improved their performance over the past two years. It also shows that many more governments could quickly improve budget transparency at low cost by making available to the public the budget information that they already produce for their donors or internal use.

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11/30/2011

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Vivek Ramkumar -ramkumar@cbpp.org 
 International Budget Partnership
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The International Budget Partnership’s Open Budget Survey 2008, a comprehensive evaluationof budget transparency in 85 countries, finds that the state of budget transparency around theworld is deplorable. This encourages inappropriate, wasteful, and corrupt spending and—because it shuts the public out of decision making—reduces the legitimacy and impact of anti- poverty initiatives. Weak performers are typically low-income countries that are heavilydependent on donor funding, countries that are heavily dependent on exports of oil and gas, and countries that have weak democracies or autocracies. At the same time, the Survey shows that anumber of countries have significantly improved their performance over the past two years. It also shows that many more governments could quickly improve budget transparency at low cost by making available to the public the budget information that they already produce for their donors or internal use.
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An extensive survey of government budget transparency in 85 countries issued on February 1,2009, by the International Budget Partnership (IBP) found that 80 percent of the world’sgovernments fail to make public enough information on their management of their nationalbudgets to enable their citizens to hold them accountable for the management of taxpayers’funds. The Survey has also found that even those institutions – specifically, national legislaturesand supreme audit institutions (SAI) – that are specifically charged with approving and/oroverseeing the expenditure of public funds lack the powers and resources necessary to performthese functions effectively.IBP’s Open Budget Survey 2008 is an independent and comprehensive analysis that evaluateswhether central governments give the public access to budget information as well asopportunities to participate in budget formulation, implementation, and evaluation processes.The Survey also examines the ability of legislatures and SAIs to hold their governmentsaccountable. This article draws on the Open Budget Survey 2008 report published by theInternational Budget Partnership. The entire report is available in six languages (English,French, Spanish, Russian, Arabic, and Chinese) athttp://openbudgetindex.org/index.cfm?fa=fullReport. The Survey analyzes the results drawn from a rigorous questionnaire that reflects generallyaccepted good practices related to public finance management developed by internationalorganizations, such as the International Monetary Fund’s Code of Good Practices on FiscalTransparency, the Organization for Economic Cooperation and Development’s (OECD) BestPractices in Budget Transparency, and the International Organization of Supreme AuditInstitutions’ Lima Declaration of Guidelines on Auditing Precepts. The Survey was managed byIBP and implemented by independent budget experts drawn from civil society organizations andacademic institutions in the 85 countries examined.
 
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The budget is the government’s most important economic policy tool and affects the lives of allcitizens, particularly the poor. A good budget will include measures to support povertyalleviation while a bad budget can ignore the poor or even actually work to their detriment.Transparency and public participation in financial management are the cornerstones of effectiveand accountable governance and are central to ensuring that a national budget reflects thepriorities of the citizenry. Without access to information, legislatures, SAIs, the media, andcitizens cannot effectively participate in decision-making nor hold their governmentsaccountable for the use of public resources. Transparency and effective public participation arecentral to enhancing the credibility of policy choices and the effectiveness of policyinterventions. On the other hand, lack of transparency can lead to the selection of inappropriateand unpopular programs and allow corrupt and wasteful spending to occur.The
 
Open Budget Survey 2008 provides an in-depth set of measures that assess the individualperformance of national governments against international best practices in transparency andoversight. It also points to the steps that governments can take to improve their practices byexpanding the amount of information available to the public and, concomitantly, by providingnew opportunities for the public to participate in budget implementation.Evidence shows that when citizens have access to information and opportunities to participate inthe budget process, the allocation of scarce public resources is more equitable and effective. Forexample:
 
In Mexico, Fundar, a nongovernmental organization, found the budget did not allocate fundsto combat the loss of lives during childbirth and successfully argued for funds for emergencyobstetrical care, especially in rural areas.
 
In India, Mazdoor Kisan Shakarti Sangathan, an organization of farmers with smalllandholdings and daily wage workers, uncovered corruption through their examination of budget-related documents. Among other types of corruption, they found that the names of dead people and fictitious names were recorded on payrolls and that payments were made forwork never done.
 
At the urging of the Uganda Debt Network, which monitors local spending, Uganda officialsidentified substandard work in school construction and evidence of corruption by localofficials and eventually denied payment to a construction firm.
 
In the Philippines, Government Watch has used budget information since 2000 to monitor thedelivery of school textbooks, the construction of new schools and other infrastructure, andthe distribution of disaster relief funds. With the cooperation of other groups, the G-Watchefforts have dramatically cut the cost of textbooks to the government, improved the quality of the books, and substantially lowered the percentage of “no-show” contractors who previouslyfailed to deliver contracted books.
 
Public Service Accountability Monitor in South Africa’s Eastern Cape Province has usedbudget reports and other information it obtained to monitor the misuse of and irregularities in
 
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 funds budgeted for essential services – such as education, health care, and the provision of clean water – that have led to poor quality in the provision of these services.
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The IBP Survey reports four key findings. The first key finding relates to budget transparency,which is calculated through the Open Budget Index (OBI). The OBI is a comparative measure of the accessibility and comprehensiveness of the eight key budget documents that internationalgood practice says all governments should publish (a listing of the eight documents is providedin Table 3). Table 1 presents by world region the average scores achieved by the countriesexamined as part of the IBP assessment. The average score for the OBI 2008 is 39 out of apossible 100. This means that, on average, countries surveyed provide minimal information ontheir central government’s budget and financial activities. IBP concludes from this that the stateof budget transparency around the world is very poor.
Table 1: Strength of Oversight Institutions and Average OBI Score by RegionRegion Legislative Strength SAI Strength Average OBI Score
East Asia & the Pacific 41 53 39Eastern Europe & Central Asia 48 57 50Latin America & the Caribbean 40 47 39Middle East & North Africa 27 21 24South Asia 32 41 42Sub-Saharan Africa 35 29 25Western Europe & the U.S. 78 84 80
Overall Average 42 45 39
Source: The Open Budget Survey 2008
Second, countries that perform badly on budget transparency share certain commoncharacteristics, including regional concentration (mostly in the Middle East & North Africaregion and in the sub-Saharan Africa region), dependence on foreign aid and on revenues fromhydrocarbon exports, and political systems that are weak democratic institutions or autocraticregimes.Third, countries that perform poorly on the OBI are typically also countries in which inadequatepowers are available to formal oversight institutions (legislatures and SAIs), thus underminingthe ability of these institutions to provide effective budget oversight. The average score for“strength of legislatures” in the Survey is 42 out of a possible 100 while the average score for“strength of SAIs” is 45.Finally, in an encouraging finding, the Survey identifies that it is in fact possible for countries toimprove budget transparency quickly and at little cost. The OBI is a biennial Survey andcomparisons between the OBI results for 2006 and those for 2008 show that some countries haveimproved their budget transparency over the past two years.Each of the key findings from the Open Budget Survey 2008 is discussed in greater detail below.

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