The Sustainable Development Goals are a set of promises to transform our world. They include ending poverty, hunger, and inequality and bringing about peace, justice, and strong public institutions to name a few. These promises cannot be fulfilled without adequate funding, though. Alex Yuster, Director of Social Policy at UNICEF, said it well: “Funding is the lifeline for turning promises into reality.”
And funding must be well managed. Thus, public budgets, the most powerful tool governments have to direct their resources to meet the needs of their people, are critical to achieving the SDGs. Unfortunately, governments often fail to fully implement their budgets according to plan. Revenues or expenditures can exceed or fall below approved amounts, resulting in what we call a budget credibility problem. Credible budgets play an important role in creating fair and sustainable societies. They ensure social investments reach those most in need[i].
In the spirit of seeking joint solutions, IBP and UNICEF co-hosted two panel events in New York during the UN General Assembly to discuss the importance of budget credibility to achieving the SDGs. At an event at the UN’s SDG Action Zone, IBP’s Chloe Cho gave a snapshot of the world’s status in budget credibility:
“Our study of 35 countries finds governments underspend their aggregate budgets by about 9% on average. This may not seem much, but if you think about the size of some governments, it can represent millions and billions of dollars. The average figure also hides some extreme cases where budgets are underspent by more than 50%. In fact, across low-income countries, average underspending is larger at 14%.”
This can translate to serious human impacts.
“What does manual scavenging in India have to do with the credibility of government budgets?” you may ask. Manual scavengers have faced caste discrimination for centuries. Despite laws passed by parliament in 1993 banning manual scavenging, the practice still continues. Bezwada Wilson, a National Convener for Safai Karmachi Andola, made it clear it is vulnerable communities like these being left behind when budgets aren’t implemented as intended. Over the past several years, the Indian government has spent less than 1% of budget allocated for rehabilitation of manual scavengers.
It’s not just manual scavengers—other communities are at risk as well. 30% of immunization budgets in 22 largely low-income countries were unspent over a multi-year period, even as these countries officially reported stock outs or shortages of life saving vaccines on 96 separate occasions during that period. Average underspending is just under 20% for agriculture and housing, and more than 20% for environmental protection – an area that includes public sector investment to address climate change.
However, budget deviations are sometimes necessary, for example when a country experiences unexpected macroeconomic shock (like the 2007/2008 financial crisis). But when deviations occur, government should explain why.
“One step that we think every government can take immediately, though, is to enhance transparency around budget deviations by providing explanations on how and why they happened. Deviations can be inevitable or even necessary at times to respond to crisis, but we can only know this through clear, detailed explanations. This step would not only signal good PFM practices but more importantly would help build trust in government and empower the public with knowledge on how their resources are being spent.” said IBP’s Guillermo Herrera.
Many governments are aware of the problem and efforts to correct it are underway. One example, IBP’s Senior Director of Policy Vivek Ramkumar told audiences, is Afghanistan’s Public Works ministry, which has more than doubled its budget execution rates in the last couple of years through a combination of better hiring practices, improved internal coordination, and cooperation with donors.
Litlhare Molemohi-Phori Senior Budget Officer in Lesotho’s Ministry of Finance, added that governments can hold themselves to higher standards of transparency and accountability, and strengthen their PFM systems. In recent years, her government has managed to increase budget execution by improving coordination, instituting procurement reforms, and enhancing cooperation with donors.
Mulele Maketo Mulele, Zambia’s Director of Development Planning, said they are trying to ensure budgets for crucial sectors are secured from cuts: “When it comes to spending on education, health and so forth, we do try to make sure that those are much more protected.”
More can and should be done to help governments stick to their promises. For example, international donors will need to improve the predictability and reporting of the aid flows and support a variety of capacity building activities. France is one state that is supporting other countries as they work to improve their budget audit and oversight systems.
Aymeric Chuzeville, head of the Department of Development in the French Ministry of Foreign Affairs, implied a ripple effect can occur, and that the larger community, including donor countries, should care: “When government budgets are not credible, it diminishes confidence in government, reduces trust of political institutions, and can disconnect officials from understanding what citizens see as priorities. . . It should also concern the international development community, which has prioritized the expansion of domestic resource mobilization in countries to finance the SDGs.”
This represents over a year’s work, and is just the first chapter in a series of ongoing research. Over the next several months, we intend to sustain the momentum through national and global-level discussions. We welcome your perspectives and invite you to raise attention on budget credibility moving forward. Visit our page, or email [email protected] for more information.
Watch the UNGA Side Event and SDG Action Zone Official Event
[i] SDG Indicator 16.6.1 measures budget credibility by assessing whether government spending is in line with the country’s approved budget, showing that the UN has recognizes this issue is critical to achievement of development targets.