Aid and open budgets: what can development partners do?

This is a guest post by Claire Schouten, International Budget Partnership

The Open Budget Survey 2015 just came out and it shares important findings for transparent, participatory and accountable development. In its fifth edition since 2006, the survey covers 102 countries and is the only independent, comparative measure of budget transparency and accountability. So what does it tell us about the state of open budgets around the world, and what can development partners do to strengthen reform efforts?

The Survey reveals that 78 of 102 countries assessed – home to nearly 70% of the world’s population – fail to provide sufficient information to the public. They score 60 or below on the Survey’s transparency measure, the Open Budget Index. This means that citizens do not know enough about how their governments generate, allocate and spend public funds and the impact that has.

There are some positive signs, however. Between 2012 and 2015 there has been modest progress toward greater transparency, with substantial gains made by some of the least transparent countries. There were great strides in Francophone Africa, for example, where regional bodies, including the West African Economic and Monetary Union and the Central African Economic and Monetary Community adopted Directives on Public Financial Management. Civil society and donors such as the European Union also played an important role in promoting transparency and accountability.

Despite this progress, there’s plenty of work still to do. Budget information, like aid information, needs to be comprehensive. Countries could improve budget transparency by providing more information on the composition of debt; the government’s macroeconomic assumptions for the budget year; tax expenditures; spending data for all government programmes; detailed information on off-budget activities such as extra-budgetary funds, and nonfinancial data on programme performance. Such information is critical for a fuller understanding of the state of public finances and the effectiveness of government policies.  This information is also essential for monitoring and achieving international agreements and targets, such as the Sustainable Development Goals and climate change commitments.

But transparent and comprehensive information is only one element of the accountability ecosystem. As highlighted in the Survey, citizen engagement in the budget process and formal oversight institutions are critical. The absence of any one of these three components undermines the entire system. Only four countries — Brazil, Norway, South Africa and the U.S. — have brought the three elements together in line with international best practice.

Development partners can play a much more vigorous role in promoting budget transparency and accountability. In particular, they should:

Ensure that information about their own aid is disclosed in a transparent manner. According to Publish What You Fund, only 58% of Official Development Assistance is fully visible for 10 of the most aid dependent countries. A precious sum of $13.4 billion of official donor aid is not visible, creating a hazy picture of what flows are going where. Greater aid transparency allows for governments to know the resources available to help them plan and spend towards development objectives and be more open about their budgets. As much as possible, donors should report on their aid in formats and timetables that are compatible with the recipient country’s budget systems.

Create incentives to encourage and sustain improvements in budget transparency and accountability in the countries they support. Some of the largest recipients of aid, such as Afghanistan, Kenya, Myanmar, Tanzania and Vietnam, score below 60 on the Open Budget Index, meaning they do not provide sufficient budget information in a timely manner. Several of these countries, including Afghanistan and Vietnam, have shown volatility in the publication of budget documents, so information gains are lost over time. Donors can help encourage all their government counterparts to improve and sustain budget transparency and accountability. This may include providing more on-budget support to countries that demonstrate better budget accountability practices.

Provide technical assistance to oversight institutions and actors, such as legislatures, supreme audit institutions, civil society and the media. In addition to their own development assistance, donor countries can join, and encourage their counterparts to participate, in fora such as the Effective Institutions Platform, the Global Initiative for Fiscal Transparency and the Open Government Partnership’s Fiscal Openness Working Group that advance peer learning and international good practices. With greater capacity to engage and pressure executives, there may be stronger budget transparency and accountability towards development outcomes.

Organise and support dialogue for country reform. Donors may help as a broker or bridge for accountability actors, inciting legislatures, supreme audit institutions and civil society to join Ministries of Finance to discuss what needs to be improved. Then there can be country ownership and sustained reforms.

The Open Budget Survey 2015 and specific country findings recommendations can be found at http://internationalbudget.org/opening-budgets/open-budget-initiative/open-budget-survey/. We hope these resources help development partners, both inside and outside government, build stronger accountability ecosystems for improved public financial management and greater development gains.

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Claire Schouten is Senior Program Officer, International Advocacy at the International Budget Partnership and Open Contracting Advisory Board Member

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