Overcoming barriers that limit accountability of public spending

Overcoming barriers that limit accountability of public spending

This piece was originally posted on the World Bank blog.

Countries around the world have responded to the COVID-19 pandemic and the ongoing economic crisis by expending trillions of dollars to support their economies and provide relief to their populations. Governments are following expedited procedures to quickly channel funds to relief and recovery programs. Still, a key challenge that countries are facing is ensuring that funds contribute to recovery and reach intended beneficiaries. This is a serious concern as cases of misuse and mismanagement of COVID-19 funds have been  reported on every continent.

Supreme audit institutions are key

Fortunately, countries already have organizations such as the supreme audit institutions (SAIs) that are responsible for providing independent assurance on the effective and lawful use of government monies, improvement in public service delivery, and response to disasters. In fact, in the aftermath of the tsunami that hit South and South-East Asia in 2004, the International Organization of Supreme Audit Institutions (INTOSAI) issued special standards on disaster-related expenditures. Further, during the Ebola pandemic in 2014, the SAIs of Liberia and Sierra Leone were lauded for their audits of emergency programs, which received extensive coverage in the national and global media.

Civil society’s involvement is necessary

Simultaneously, civil society organizations (CSOs) have also developed innovative methodologies to monitor government expenditures during emergencies and  ensure that  remedial measures are instituted based on audits conducted by SAIs. For example, in the aftermath of the devastating earthquakes that hit Mexico and Nepal in the past few years, local CSOs used audit reports issued by their national SAIs to demand that their governments implement reforms in relief programs.

CSOs have now joined calls made by various international bodies and financing agencies for SAIs to be more involved in the monitoring of COVID-19-related funds. These are positive developments but more needs to be done to ensure that audit findings foster the efficient and effective use of public resources for the benefit of citizens.

Effective oversight relies on an ecosystem

In November 2020, the International Budget Partnership (IBP) and the INTOSAI Development Initiative (IDI) are releasing a joint report that assesses the adequacy of national oversight systems based on data from 117 countries in the latest Open Budget Survey.

Audit and oversight are an “ecosystem,” consisting of a set of interconnected actors, conditions and processes that need to be in place and function well for the system as a whole to perform effectively. Although SAIs lead the charge, the success of their audits in upholding accountability and enhancing performance in large part depends on the actions of legislators, civil society, the media and ultimately the executive.

Overcoming barriers that limit accountability

Too often, SAIs suffer from deficiencies that are compounded by weak legislative oversight, inadequate responsiveness from executives to reports, and few opportunities for public engagement in the audit and oversight process. These challenges preceded the pandemic and are likely to be exacerbated by the crisis.  The IDI-IBP report suggests that all partners of the oversight system need to take action to strengthen accountability. Recommendations include:

  • Increasing the mandate, independence and resources of SAIs to audit public funds, including special funds established to channel resources emergency programs,
  • Improving the quality of audits by strengthening systems and independent quality checks,
  • Enhancing transparency with timely publication of audit reports and tracking executive responses to recommendations,
  • Ensuring that legislatures scrutinize SAI reports, including the ones on emergency spending measures, and
  • Expanding opportunities for public engagement during the formulation of plans, legislative discussions, and crucially, executive implementation of audit recommendations.

It is very important that governments and other stakeholders use audits to ensure that public funds are expended in a manner that will best save lives and reduce hardships caused by the coronavirus pandemic.

*Martin Aldcroft is Senior Manager of the Strategic Support Unit of the INTOSAI Development Initiative, Vivek Ramkumar is the Senior Director of Policy at the International Budget Partnership and Edward Olowo-Okere is Director of the Global Governance Practice at the World Bank.

* * In 2019, IBP and IDI signed a strategic partnership agreement out of mutual recognition of a shared vision and fruitful synergies while supporting effective engagements between SAIs, legislatives and civil society in order to enhance accountability, audit impact and make a difference to the lives of citizens. This joint report “Harnessing accountability through external public audits: An assessment of national oversight systems” is one product resulting from the partnership.

Promoting women’s equal participation in the economy

Promoting women’s equal participation in the economy

What is the first thing that comes to your mind when you see this image?

It’s  a vivid depiction of an Indian village, with images of women working – domestic chores of cooking, cleaning, attending to children, shopping for food, milking the cow and so on. None of this work is paid.

This painting by 14-year old Anujath Sidhu Vinayal from Thrissur in the southern state of Kerala is the cover for the “Gender and Child Budget 2020-21”. It shows the state government’s intent to recognize women as workers and to present policy measures to advance this shift.

Anujath has been painting since he was four years old. His painting titled, “My Mother and Mothers in the Neighborhood,” is a tribute to his mother, who died last year. Just days after her death, this painting won an international award. This beautiful painting highlights the need to create avenues to promote women’s equal participation in the economy.

Gender budgeting has a long history in India. It all started with the Indian government constituting a “Committee on the Status of Women in India” (in 1971) in response to a request from the UN to commemorate the International Women’s Year in 1975. The Committee report called Towards Equality  examined the constitutional, legal and administrative provisions that have a bearing on the social status of women, their education and employment, and their implications.

Twelve years later in 1986, 27 schemes where beneficiaries could be counted, were picked up to be monitored and direct funds for women. Another eleven years later, in 1997, Women’s Component Plan (WCP) was introduced to earmark at least 30% of Plan funds by government departments perceived to be “women-related.”

The next two decades saw many developments – deepening of WCP at state and Union level, coupling WCP to Gender Budgeting (GB), recognizing the importance of Gender Budgeting in the 2001 “National Policy for the Empowerment of Women,” piloting gender budget analysis for national Budgets in 2000 by National Institute of Public Finance and Policy (NIPFP) – a think tank that assists Union, state and local governments frame public policies – and constituting Gender Budget Cells in 2004-05.

All these efforts led to a commitment to institutionalize GB. Gender Budgeting is an analytical tool to scrutinize government budgets from a gender lens, recommend more programs that directly benefit women and call for their better implementation.

India saw its first-ever Gender Budget Statement (GBS) in 2005-06 that covered a modest 10 demands-for-grants comprising 2.79% of the total Union Budget. The next year GBS covered 24 demands and 5.09% of the total Union Budget. In 2020-21, Centre for Budget & Governance Accountability (CBGA) analyses showed there are 25 demands for grants in Part A and 33 in Part B of the GBS, comprising 4.71% of the total Union Budget. Part A of the GBS show allocations across government departments that are exclusively for women and Part B list government schemes that allocate at least 30% accruing to girls / women.

When we see in absolute terms, the GBS has grown 10 times in a span of 15 years. It now covers Rs.143,461 crore from Rs. 14,379 crore in 2005-06. However, when seen as a proportion of total Union Budget allocations, the magnitude does not seem to have changed much (from 2.79% to 4.71%).

That GB is not a separate budget for women is an important caveat. It is an approach to understand the gender-differentiated impact of budget making and implementation. It also goes beyond public expenditure analysis and looks at government’s resource mobilization efforts and policies from a gender lens.

Last year (2019), India’s Finance Minister in her Budget Speech announced setting up a committee to evaluate 15 years of gender budgeting. As Indian economist, Ashok Lahiri said, “…the progress has been mixed. There is satisfaction to be derived from the fact that gender budgeting has been sustained for the last 15 years. Not only has it been sustained but it has even spread to subnational governments including states and union territories…”

Lahiri also credits various arms of the government – Ministries of Finance and Women & Child Development, Comptroller and Auditor General, Planning Commission – as well agencies such as UN and NIPFP for this progress. It is to the credit of women rights’ networks, allies amongst legislators and policy research organizations such as CBGA (a longstanding IBP partner) whose continued scrutiny and independent analyses led to deepening of gender budgeting as an approach.

Coming back to the cover page of Kerala government’s Gender Budget document, valuing women’s work (paid and unpaid) is a substantive first step in shifting public policy attitudes.

In September, the High Court in Tamil Nadu, another southern state, ruled in a judgment valuing a woman’s unpaid labor more than earning family members. Also in September, India’s National Statistical Office released its report on a Time Use Survey for the period January to December 2019. The Survey, a first in 20 years, measures people’s participation rate and time spent on paid, unpaid and care activities. Unsurprisingly, it shows the extent to which gender determines how people spend their time. But it also reveals the impact of other factors such as class, caste and geography, on time use. This inequality clearly has a negative economic impact on women.

Approaches such as GB can be further deepened, be it by ensuring data integrity, consistent reporting, focus on outcomes and not on outlays, and most of all, recognizing the intersectionality approach to underpin this exercise to bring about meaningful changes in the lives of girls and women who are also Dalits, Adivasis, persons with disabilities, homeless and transgender people.

Help our children make it through COVID-19: we need transparent budgets

Help our children make it through COVID-19: we need transparent budgets

Most children in the world are not attending school. Millions are unlikely to return. Disruptions to cash, food, health, protection and other programs leave hundreds of millions of children exposed to hunger, violence, sickness and even death. Such risks are magnified where household income has fallen due to job loss, lower earnings and/or fewer remittances.

“If you are not infected, you are affected.” Once commonly used when referring to the HIV/AIDS epidemic, this same phrase can now be applied to the global impact of the coronavirus pandemic. While younger children are not considered at high risk of direct health complications due to the virus, the epidemic is having an indelible and devastating impact on their current and future lives.

COVID-19 has significantly overstretched the capacity of many governments to finance the delivery of essential services to children and their families. Well before the pandemic, many countries were failing to invest sufficient resources in programs that improve the wellbeing of vulnerable populations, including children. With the collapse of government revenue alongside the surge in demand for spending in recent months, fiscal deficits are widening to historic proportions. In this context, governments must ensure that massive budget reallocations and fiscal stimulus packages do not crowd out spending on goods and services that often serve as a lifeline.

Government spending decisions have life and death consequences. A study by The Lancet shows that a modest disruption of health systems and decreased access to food is likely to kill an additional 1.1 million children and 56,000 mothers over the next six months as an indirect result of the COVID-19 pandemic. This means that public finance decisions taken today will have a profound impact on the trajectory of the world’s 2.4 billion children and their caregivers, especially those living in developing countries.

Public oversight of government spending is imperative

At all times, but clearly even more so during periods of crisis, creating opportunities for the public to provide input and monitor how governments allocate public funds is crucial. Yet, we know from the results of the latest Open Budget Survey (OBS 2019) that most countries fall short of this. As the world’s only independent, fact-based, and comparative assessment of public budget accountability — transparency, oversight, and public engagement — the OBS offers insight into how inaccessible government budgets can perpetuate poverty and inequality.

For example, recent research by UNICEF and the International Budget Partnership found that one-third of the budget for immunization programs in 22 countries went unspent during the period from 2009 – 2017, the most recent years for which data was available. Without an open budget process, it is unclear what happened to these resources. While poor budget transparency practices are a major concern for children during normal times, the stakes have never been higher than in 2020.

As the impacts of COVID-19 continue to intensify across the globe, there is a danger that the open budget agenda will reverse and close. Normal budgeting and spending processes have already been upended as emergency packages move forward with limited or no consultation from the public. Parliamentary oversight functions have been significantly reduced in many countries, and lockdowns have created new public finance planning and implementation challenges. The year 2020 is likely to be characterized by the largest public spending deviations in all of history.

Open budgets can be an effective tool in creating a better future for our children

As we cope with this crisis, we also see an opportunity to shape the future — where citizens and government are in active dialogue about the best way to invest scarce resources. Open budgets help align government spending with the needs of vulnerable communities.

Producing comprehensive, useful, and timely budget information enables different groups to assess the impact of government spending and hold governments accountable. In addition, higher credit ratings from improved transparency allow governments to borrow more and cheaper funds, while also attracting greater budget support from donors. This increases the overall pot of resources and potential impact of national budgets on people’s lives.

We’ve seen firsthand how information from the OBS empowers governments and civil society to quickly improve budget openness.

Using results from OBS 2017, UNICEF and IBP supported finance ministries in implementing budget transparency improvement action plans, which catalyzed the publication of more budget information and created new spaces for citizens to contribute to public finance decisions. As a result of these efforts, 15 of the 19 countries in Eastern and Southern African that participated in the latest rounds of the OBS recorded significant improvements in their scores.

In the face of the COVID-19 crisis, we must advocate for and keep the pressure on governments to conduct proper consultations in forming their budgets, carefully document what is being funded, and report on the impact of that funding to hold them accountable.

In recent days, IBP and UNICEF convened a conversation on the transparency of health and education budgets with over 150 participants from government and civil society around the world as well as a discussion with finance ministry officials and civil society organizations from more than a dozen countries in Eastern and Southern Africa to discuss the latest Open Budget Survey results.

We join hundreds of signatories from organizations around the world to call on governments to adopt open budget practices now. Together, we can use budgets as the ultimate tool to champion the voices of our children when they need it most.

As COVID-19 spreads, CSOs argue that government budgets should address inequality and discrimination

As COVID-19 spreads, CSOs argue that government budgets should address inequality and discrimination

“We are all in this together”—or, at least that was the message early in the COVID-19 pandemic. The virus does not discriminate and anyone can catch it. However, it did not take long for it to become obvious that this was far from reality in a story that is still unfolding.

“Shockingly skewed illness and mortality rates have tracked and exposed racial and class divides. In some of the world’s richest nations, health care systems have proven grossly inadequate, and race, gender, religious and class discrimination have skewed access to housing, food, education and technology in ways that have yielded radically different outcomes. Gaping North-South disparities have been exposed. And many national and local governments, constrained by austerity policies, lack the will, resources and administrative capacities to step in effectively.” Report of the UN Special Rapporteur on extreme poverty and human rights, July 2, 2020

From the outset, international organizations—including the International Monetary Fund (IMF) and World Bank—donors and regional entities, began to highlight that, although the virus was reaching every corner of the globe and no one would be safe until everyone was safe, the pandemic was impacting individuals and communities very differently. Indeed, the novel coronavirus is laying bare pre-existing inequalities and intensifying the gross social injustices of extreme poverty. A more inclusive recovery is needed. It must not be business as usual.

Civil society organizations around the world working on budget issues have geared up to advocate for more transparent and just responses and to address the very unequal impact of COVID-19 on different groups of people. Building on their previous work, these organizations are taking a variety of approaches, but they are all highlighting the fact that budgets can (and should) play a critical role in reducing inequality and discrimination. Budgets are, after all, the most important economic policy document that governments can use to protect people´s rights and provide services.

What tactics are groups around the world using to expose inequalities and, in some cases, discrimination in budgetary responses to COVID-19? In many instances, they are exposing how the social and economic crisis induced by the pandemic is impacting vulnerable groups the most and how emergency measures and budget adjustments could exacerbate existing inequalities or discriminatory practices—if not by intent, then in effect.

Influencing public debate

Some international organizations and coalitions—including the Center for Economic and Social Rights (CESR)—are seeking to influence public debate by calling for human rights  to be at the core of government responses and explaining how they provide a framework for exposing and redressing discriminatory policies, including budgetary ones. Also guided by human rights obligations, the Asociación Civil por la Igualdad y la Justicia (ACIJ) in Argentina has published an overview of the measures implemented by the government in the wake of COVID-19, highlighting the need for greater budget transparency and participation to ensure more equitable fiscal policies. As the Center on Budget and Policy Priorities (CBPP) has pointed out, both in times of relative prosperity and recession, states’ “fiscal policy choices help determine whether someone’s race or ethnicity, gender, income, place of birth or ZIP code affects their ability to achieve their potential and live unburdened by the hardships that poverty, racism, discrimination and bias cause.” The center emphasizes that this challenge is brought into even sharper focus in the fallout from the COVID-19 pandemic.

Previously, the ADVA Center in Israel had called for budgets to be “engines of equality,” not just of growth, since “growth in and of itself cannot guarantee an improved standard of living for all segments of the population or all areas of the country, and certainly cannot guarantee that the enlarged pie will benefit all.” More recently, the ADVA Center highlighted the cost of the coronavirus and its impact on the lowest income earners and most vulnerable populations. Likewise, Guatemala’s Instituto Centroamericano de Estudios Fiscales (ICEFI) analyzed budget execution, raising concerns about the small portion of resources directed to children and adolescents. It also exposed the limitations of budget information when attempting to conduct comprehensive analyses of government spending. Meanwhile, a joint initiative by a coalition of national NGOs in Latin America called on governments to review and eventually eliminate tax privileges, given their tendency to increase inequality.

On the other side of the world, in Kenya, IBP’s country office has undertaken an analysis of tax policy responses, raising concern about the lack of scrutiny and the less-than-progressive characteristics of some of them.

Interacting with legislatures

As governments continue to adjust their budgets to respond to the coronavirus crisis, some organizations at the national level are engaging with legislatures to document how budgetary adjustments can lead to inequality and discrimination. The Budget Justice Coalition in South Africa submitted a proposal to the Select and Standing Committees on Finance in connection to the government’s supplementary budget for 2020, highlighting the risk of a “regression of socio-economic rights,” as well as the failure to respond adequately to violence against women and children. For its part, the Institute for Social and Economic Studies (INESC) in Brazil is working to expose the government’s limited budget execution for policies and programs that protect women against violence, even though more resources were allocated to the Ministry of Women, Family and Human Rights as a result of the pandemic.

Engaging with the judiciary

Other groups are engaging with the judiciary to ensure more equal and non-discriminatory measures in response to COVID-19. In Colombia, for example, Dejusticia has turned to the Constitutional Court to ensure that the Emergency Fund for the Pandemic prioritizes health coverage for the most vulnerable groups, including people living in poverty, refugees and those with disabilities. Argentinas’ ACIJ worked to get access to the internet and computers for children living in poor neighborhoods (villas) in Buenos Aires province, ensuring their right to education as classes moved online. This was achieved through a precautionary measure imposed by a local court that ordered the government to provide access and equipment. Of course, as the Centre for Budget and Governance Accountability (CBGA) in India and Policy Forum in Tanzania have reported, disparities in access to the internet, technology and even electricity are not readily fixable by court order, presenting ongoing challenges to remote education during the pandemic.

Involving directly affected persons

Other organizations are focusing their attention on engaging with those directly affected to ensure their voices are heard when governments identify priorities, as well as to help them monitor the provision of services. IBP South Africa, for example, is working with partners in informal settlements  and health professionals to identify and remedy inadequate hygiene. The close-quarter living and shared water and toilets common in informal settlements put residents at increased risk from COVID-19, but was being inadequately addressed by the state.

Meanwhile, in Senegal, IBP partner the Federation of Associations of Persons with Disabilities (FSAPH) successfully advocated for inclusion of people with disabilities, who often are unable to access basic public services, in the registry for poor people. The Ministry of Community Development now has been instructed to expand the budget for COVID-19 services to include more people with disabilities.

Leveraging technology

Harnessing new technology also is effective in improving the equity of the COVID-19 response. The National Campaign on Dalit Human Rights (NCDHR), an organization focused on caste-based discrimination in India, developed an app to monitor the implementation of emergency measures. It also joined a dozen other organizations in the country to call on national authorities to ensure that the response to COVID-19 is sensitive to those in most need. The organizations suggested specific policy options.

The approaches of these civil society organizations form a common thread: They reveal the myriad ways the pandemic has exposed pre-existing inequalities and discriminatory practices by drawing attention to concrete examples. The work done by CSOs to analyze how budgets impact vulnerable groups will help ensure a more just response and hopefully a profound re-think of public finance, thus moving it toward a more people-centered framework. The future must be one in which no one is left behind and decisions related to budgets and fiscal policies are rooted in the principles of equality and non-discrimination.

Large-scale debt swaps can help fight debt, climate change and nature loss together

Large-scale debt swaps can help fight debt, climate change and nature loss together

In the maelstrom of COVID-19, unsustainable debt, climate change and catastrophic biodiversity loss threaten a sustained and sustainable recovery from the impacts of the pandemic. The International Institute for Environment and Development (IIED) has released a new report on a new form of debt swaps that could provide developing countries with an opportunity for a green post-COVID-19 recovery that would also help reduce poverty.

A global pandemic in the midst of a triple crisis

Developing country debt reached over US$8 trillion in 2019. On average developing countries spent over 10 percent of their government revenues on debt repayments in 2018, and for several least developed and middle-income countries the amount rose to 20 percent. Money that is crucial for addressing the climate and biodiversity emergencies that are bearing down on already struggling countries, as well as for providing for improved education, infrastructure, and health.

In “Tackling the triple crisis: using debt swaps to address debt, climate and nature loss post-COVID-19” IIED shows that using large-scale debt swaps as part of post-COVID recovery measures would help address the pressures from crippling debt and the climate and biodiversity crises. COVID-19’s economic fallout means less of the finance needed to address poverty and the impact of climate change and biodiversity loss will be available, pushing millions more women, children, and men into poverty.

Poor Countries and Climate FinanceBy exchanging an existing debt contract for one that writes off debt or reduces the debt’s original value by, for example, having repayments made in the debtor country’s currency or charging lower interest rates, a developing country’s overall external debt could be reduced.

The money saved would be used to invest in poverty-reducing climate resilience programs, climate emissions mitigation, or biodiversity protection initiatives.

To date, debt swaps have been limited to a few small-scale projects in which the money has been managed in trust funds by international NGOs. IIED’s “Tackling the triple crisis” shows that by creditors channeling the money direct to developing country governments’ budgets specifically for financing such action as reforestation or researching or planting climate resilient crops, debt swaps can be used on a large scale.

It also means more money will be available for these issues than under earlier project-based versions and be more cost effective. By having the money channeled through governments’ financial systems, it increases their accountability to their citizens and commitment to the environmental programs.

Large-scale debt swaps for climate and nature will also benefit public and private lenders as debt will be invested productively to increase sustainable economic growth and so reduce the need for further debt write-offs. They will also help creditors to meet their pledges to improve environmental and social standards.

Such debt for climate and nature swaps will also help achieve the key objectives of increased biodiversity and climate finance set by next year’s UN biodiversity conference being held in China and the UN climate summit in the United Kingdom.

The report calls on the international community to work with debtors to establish a technical working group, under guidance of an international body such as the World Bank. The working group’s purpose would be to develop a comprehensive and coordinated climate and nature program swaps initiative over the next three years to address the crisis of debt, climate change and biodiversity loss.

See ‘Tackling the triple crisis: using debt swaps to address debt, climate and nature loss post- COVID-19‘ by Paul Steele, IIED chief economist, and Sejal Patel, IIED climate change researcher. The report includes a comprehensive list of the developing countries that will benefit most from this type of debt relief.

The International Institute for Environment and Development held a webinar on this topic on Sept. 9. A recording of the webinar is available here.

Blind Budgets: How governments hide the impact of fiscal policies on poverty and inequality (and what they could do instead)

Blind Budgets: How governments hide the impact of fiscal policies on poverty and inequality (and what they could do instead)

One of the key questions ordinary citizens ask about government budgets is “how will it affect me?” This is a particularly important question for people who live in poverty or are part of disadvantaged and marginalized groups. For them, how much tax they pay or what public services they receive can make the difference between deprivation and well-being. This is even more relevant during times of crisis like the COVID-19 pandemic, when poverty and inequality worsen, and governments are called on to provide assistance to those most in need.

The World Bank estimates that the COVID-19 pandemic is likely to push between 71 and 100 million people into extreme poverty by the end of 2020. Other estimates put the global tally at around half a billion people, and the likelihood of reversing recent gains in reducing global poverty all but certain. Inequality was already on the rise before COVID-19, and the pandemic will likely make the gap bigger, in rich and poor countries alike. The virus magnifies pre-existing differences in economic and social conditions by disproportionately disrupting the livelihoods of those at the lower end of the income scale who cannot self-isolate, have less job security and are more exposed to possible contagion.

Therefore, it is critical to understand how governments are providing the public with adequate information about the impact of budget policies on poverty and inequality to tackle these social ills.

We started looking at this issue in a brief published in early 2019, which used data from the 2017 Open Budget Survey to show that most governments publish very limited information on these topics. The information that is made available, our research showed, is often scattered and incomplete, and reporting back on implementation of relevant budget policies is weaker still.

Unfortunately, the results of the 2019 Open Budget Survey show little improvement, if any.

For people and organizations interested in knowing what policies governments are putting in place to reduce poverty, the annual budget proposal prepared by the executive is the first place to look. However, only less than half of the governments in our survey that publish such a document present information on funds allocated to those policies—and only about a third explain what the numbers actually mean. Among these, here are some interesting examples:

  • In Thailand, the Budget in Brief document includes details about one of the guiding strategies for the government’s 2019 budget, called “Poverty alleviation, inequality reduction and internal growth creation,” through which resources are allocated to areas such as social protection, health insurance and old age pensions.
  • Rwanda’s Budget Framework Paper brings together information on government interventions for the “Social Transformation Pillar”—which includes as one of its objectives a “poverty free Rwanda”—ranging from eradicating malnutrition to improving access to health and education services.
  • New Zealand introduced a new Well-Being Budget approach which links public spending to a series of well-being indicators, focusing government action on priority areas such as addressing child poverty and improving the living conditions of the Māori population.

Monitoring how those funds are spent is even more difficult, with less than a fifth of governments including detailed reporting on pro-poor policies in their year-end reports. In South Africa and Brazil, governments publish detailed reports on the actual spending and performance of various programs related to poverty reduction, even though these are not compiled in an easy-to-access manner.

In order to understand how public spending affects vulnerable groups (i.e. women, the elderly, ethnic minorities, etc.)—and therefore what impact it has on inequality across various dimensions—the budget proposal needs to provide information organized for that specific purpose. Unfortunately, only about a third of the budget proposals analyzed in our survey include such alternative displays of expenditure. The finance ministry in Bangladesh, for example, has regularly published gender budgets and child budgets as part of its budget proposal. And in Ecuador, the medium-term budget programming document includes tables that summarize spending aimed at “closing equity gaps” along various dimensions, including gender, disability, age groups, etc.

In summary, many governments do not seem to consider their budgets’ impacts on poverty and inequality as something worth explaining or reporting on, keeping citizens in the dark. In fact, they do not seem to consider the needs and opinions of vulnerable and marginalized groups as relevant in the budget process at all. Out of 117 countries covered in our survey, just half (56) offer opportunities for citizen engagement during budget formulation. Among these, only six make some effort to include vulnerable groups in those discussions. The situation is even worse during budget execution, with only one government out of 31 making a similar effort. Interesting examples include countries like India and Zimbabwe, where finance ministries hold pre-budget consultations where representatives of disadvantaged groups are invited to participate and present their views. Mexico is the only country that promotes participation of vulnerable and under-represented groups during budget execution, through social audits that involve beneficiaries of social programs targeted to disadvantaged groups. If more countries followed their example, public spending could be better targeted and therefore more effective, a very important plus during crises, when resources are scarce and needs great.

While citizens are frustrated with governments for many reasons, this lack of attention and consideration for the poor and disadvantaged will likely fuel continued dissatisfaction. As successive waves of protests—both before and during the pandemic—have shown, citizens are increasingly and more forcefully demanding that governments chart a new course, one that takes their needs and interests into account, takes concrete steps to address long-standing structural inequalities and builds back trust by reshaping the social contract between governments and citizens. The enormous challenges that governments will face in the remaining stages of the pandemic, and its aftermath, make these demands more pressing, as choices about how to raise and spend public resources become more contentious and directly impact people’s lives.

Public policy processes—and the yearly budget cycle that underpins them—are one of the arenas where a renewal of the social contract can take place. Governments wanting to heed citizens’ calls could do worse than follow some of the positive examples highlighted above, lifting the veil of opacity around the impacts of their budgets.

These positive examples demonstrate how governments can take immediate and concrete steps to provide information on the budget’s impacts on poverty and inequality and involve citizens in formulating and monitoring the implementation of better budget policies that put reducing poverty and inequality at the heart of government action. As the COVID-19 pandemic continues to affect economies and societies, it is fundamental for governments to take these efforts more seriously. The ongoing formulation of their budgets for 2021 could be the perfect opportunity to get started.