Why Open Budgets? Why Now?
“I think they just ate the funds. Do you see a school here?”
This was the response from a man from Likoni, a poverty-ridden area on the outskirts of Mombasa, Kenya, when asked about what happened to over US$55,000 that the local government was supposed to have used to build the Mrima Secondary School. The man in his mid-30s stood next to a hole surrounded by his neighbors; the hole was reportedly where the Constituency Development Committee had begun digging the foundation for the school and then inexplicably abandoned the project. According to the neighborhood spokesperson, the project wasn’t the right one anyway.
“No one came to the community to ask if we wanted to put a school here. What we need is a dispensary,” he reported, with the others nodding and murmuring their assent.
It doesn’t have to be this way. There are sufficient public resources available globally to make substantial progress on eradicating extreme poverty and creating sustained economic development, but only if these funds are spent effectively and equitably.
We know that for this to happen, governments must have institutions, systems, and processes in place to gather information on public needs and priorities, make appropriate and legitimate decisions about how to raise revenue and spend it, implement these decisions efficiently, and assess how well they did in terms of financial management, service delivery, and outcomes.
It seems in the case of the missing school in Likoni, none of these things happened.
So what do these public finance systems look like? Well, they are transparent – government provides comprehensive, timely, and useful information to the public throughout the budget process; participatory – the government provides meaningful opportunities for civil society and the public to engage in budget decision making and monitoring; and accountable – there are independent formal oversight institutions (legislatures and supreme audit institutions) that have sufficient resources and capacity to hold the executive to account.
Not only does the research support such systems in terms of improving governance, budget policy choices, implementation on the ground (i.e., schools filled with kids learning, not abandoned holes), and, ultimately, outcomes, but there is also growing evidence that greater budget transparency has other benefits, including reducing certain risks to governments and the global economy (in the recent crisis, nearly 25 percent of the unexpected increase in public debt was found to be linked to governments’ failure to provide a clear picture of their financial position) and reducing costs for government borrowing. Lower borrowing costs mean countries have more funds available to build roads, deliver clean water, and combat maternal mortality.
So, Are We on the Right Path? The Upcoming Release of the Open Budget Survey 2012
Every two years the International Budget Partnership conducts the Open Budget Survey (first round was in 2006) to measure the openness and accountability of government budget systems and practices around the world. Drawing from the Survey, the IBP calculates the Open Budget Index (OBI), the most comprehensive cross-country measure of public access to information on the receipt and expenditure of public funds available. The Open Budget Survey 2012, the latest round, covers 100 countries, which makes it the largest comparative, independent assessment to date of budget information, processes, and institutions. As we approach the release on 23 January, it’s a good time to look at where we’re at now, and what the risks are for not making progress toward open budgets.
The 2010 Survey presented a mixed picture. Overall the state of budget transparency was unacceptably poor, with an average OBI 2010 score of only 42 out of 100, and in 22 countries, the governments provided little or no budget information at all — effectively shutting the public out of the budget process entirely.
However, the 2010 Survey did identify a handful of countries, representing a variety of contexts, that had made impressive gains, demonstrating that substantial improvements can be made quickly and at little cost, if there is sufficient political will.
Why is this important, and what can we expect from the 2012 Survey?
The release of the 2012 Survey comes at a critical time. Governments in rich and poor countries are continuing to deal with the fallout from the economic crisis, the world community is pulling together to finance and implement solutions to shared challenges like persistent poverty and the effects of climate change, and substantial new funds are expected to flow into government coffers from promised increases in foreign assistance and new domestic sources — the influence of budget decisions in the outcomes of these efforts cannot be overstated.
At the same time, there is a blossoming international consensus among governments, civil society, and other public finance and economic development actors around the need for greater budget transparency and accountability. This consensus has spurred several global, multi-stakeholder initiatives to promote open and accountable governance, including the Open Government Partnership, the Global Initiative for Fiscal Transparency, and the global civil society Movement for Budget Transparency, Accountability, and Participation.
So the Open Budget Survey 2012 release comes at a time of high stakes for open and accountable budgeting and unprecedented opportunity to make substantial progress. It will cover:
- The current state of budget transparency around the world.
- Who is the transparency champion? And who came in last?
- Trends over time.
- Which country made the most progress? And who were the backsliders?
- Public participation.
- Guess which country is the leader on bringing citizens and civil society into the budget process. You might be surprised.
- Formal oversight institutions.
- Are legislatures and auditors strong enough to hold the executive to account for managing public money?
The arguments for open budgets are too strong to be ignored; the time for concerted action is now. The 2012 Survey will tell us where we are, where we need to go, and how to get there.
Watch this space for the global release of the Open Budget Survey 2012 on 23 January 2013!