Why are open budgets important?

Guest post by Paolo de Renzio, Senior Research Fellow, Open Budget Initiative 

If you want to fight poverty, you need to care about budgets. They are the government’s most powerful tool to meet the needs and priorities of a country and its people. Public budgets are the blueprints for how the government will raise and spend the public funds needed for the policies and programs that will translate its priorities into action.

At the International Budget Partnership (IBP), we aim to ensure government budgets are more responsive to the needs of poor and low-income people in society and, accordingly, to make budget systems more transparent and accountable to the public.

On 23 January, we released the Open Budget Survey 2012, the only independent, comparative, and regular measure of budget transparency and accountability around the world. Produced every two years by experts outside government, the 2012 Survey reveals that the national budgets of 77 of the 100 countries assessed fail to meet basic standards of budget transparency. These 77 countries are home to half the world’s population.

The 2012 Survey finds that the level of budget transparency around the world is still dismal. Governments publish less than half of required budget data, and only 23 of the 100 countries surveyed in 2012 provide their citizens with comprehensive budget information. Twenty-one countries do not even publish the Executive’s Budget Proposal, which lays out a government’s main spending priorities.

The Survey also finds that there is a positive but slow trend toward improvement. For example, there was a 20 percent increase in budget transparency scores in 40 countries with comparable data between 2006 and 2012. Many countries with medium levels of budget transparency, however, are failing to advance reforms, showing virtually no change in their scores.

While some countries show impressive improvements (Honduras, Afghanistan, São Tomé & Príncipe), others saw sharp declines in their levels of budget transparency (Egypt, Zambia, Sri Lanka).

Moreover, hardly any countries provide significant opportunities for citizen engagement in the budget process, and this lack of openness is often coupled with oversight institutions that, while moderately powerful in principle, face huge constraints in holding governments accountable in practice.

Shifts in the international context might be gradually changing the underlying incentives that governments around the world face when deciding how much information to give to their citizens. There is a growing consensus and political momentum around opening up budget processes, also thanks to initiatives such as the Open Government Partnership (OGP) and the Global Initiative for Fiscal Transparency (GIFT), and other related initiatives like the International Aid Transparency Initiative (IATI).

IATI is particularly important for aid-dependent countries in Africa and Asia, as it allows them to track external development finance, and to properly align these funds to their own budgets.

This is why we are working with the donor community and Publish What You Fund to develop ways to map aid flows in a way that allows recipient governments to include them in spending plans and budget proposals.

This work will help aid-dependent governments to have a much clearer understanding of where best to allocate their resources. In turn, those governments will be able to present a more complete picture of public spending to their citizens.

While the final responsibility for opening up budgets to public scrutiny falls with each country’s government, there is a lot that donor agencies can do to help this process along. There are four specific recommendations highlighted in our Report:

  • Use the High-Level Principles developed by GIFT as a frame to harmonise existing norms and assessments around budget and fiscal transparency;
  • Support budget transparency reforms in countries that they give assistance to. This might mean using aid modalities such as sector or general budget support, that are less disruptive of country budget processes;
  • Follow the example of the European Commission or the UK Department for International Development in establishing clear benchmarks and incentives for recipient governments to open their budget processes;
  • Ensure that transparency, participation and oversight are duly incorporated into all of their training and technical assistance activities in the area of public budgeting.

 

Paolo de Renzio
Paolo de Renzio, Senior Research Fellow, Open Budget Initiative
 
De Renzio joined the International Budget Partnership in October 2010 as Senior Research Fellow and will be based in Barcelona, Spain. He is responsible for developing and promoting a research agenda on budget transparency and accountability and supporting the Open Budget Survey. Prior to joining the IBP, he worked as a Research Fellow in the Centre for Aid and Public Expenditure at the Overseas Development Institute; as an economist and policy advisor in Papua New Guinea’s Ministry of Finance; and as a UNDP public sector specialist, lecturer, and independent consultant in Mozambique. De Renzio has been a consultant for the World Bank, the Organization for Economic Cooperation and Development, the European Commission, and for bilateral donor agencies, and international nongovernmental organizations. His research includes topics such as aid architecture and mutual accountability, donor conditionalities and general budget support, and quality assessments and reform of budget systems. De Renzio recently completed his PhD at the University of Oxford, focusing on the impact of donor policies and aid modalities on budget systems in developing countries. He also holds an MSc in Development Studies from the London School of Economics and a Bachelor’s degree in Economics from ‘Bocconi’ in Milan, Italy.

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