INITIATIVES

Budget Credibility

Our Budget Credibility initiative delves into government spending to see where it deviates from the approved budget and investigates why these deviations occur. Pinpointing where and why governments underspend or overspend highlights problems in public financial management systems that need reform in order to deliver the services citizens need and drive progress toward development goals.

About Budget Credibility

Whether a government meets its revenue and expenditure targets during the fiscal year. When actual spending veers from the approved budget, we describe it as either underspent (if spending is less than what was allocated) or overspent (if spending is greater than the allocation).

If budgets are not implemented as intended, this directly impacts when and how essential services are delivered and can undermine progress in addressing poverty and inequality.

Our research has found that budget credibility is a challenge that deeply impacts low-income countries. In a 2019 multi-country study, we found that levels of annual underspending in government budgets averaged nearly 10% across 35 countries, and 14% in low income countries. This is larger than the entire health budget for many countries.Government underspending often impacts key priority areas such as health, education and nutrition.

Research conducted in partnership with 24 civil society organizations in 2018 also found that large deviations in spending on government programs are often not explained or justified in government reports.

Civil society has a role to play in tracking budget deviations and holding governments accountable to ensure that governments live up to their promises to spend adequately and deliver on national and development priorities.

In Nigeria, research on tracking the budget credibility of COVID spending led civil society groups to push for more access to data for public infrastructure projects. Joint advocacy from civil society organizations has led to the government including a requirement for ‘geotagging’ of projects in the Budget Circular for 2022.

In Ghana, research on the national fertilizer subsidy program found that the government overspent its budget yet under-delivered the actual subsidies – especially to women farmers – due to a backlog of payments to fertilizer importers. In 2022, through help from civil society organizations, the Ghanaian government promised to put safeguards in place to ensure that women farmers get their fair share. And IBP is working with community organizations to improve budgetary allocations and disbursements from the government.

In Senegal, research showed that sanitation budgets are consistently low priority in government spending, and undermined by procurement and institutional coordination challenges. Policy dialogues between government and civil society have secured commitments to improving spending rates in coming years.

We are also promoting budget credibility through external audits as a way to strengthen the implementation of the Sustainable Development Goals (SDGs). We are currently collaborating with Supreme Audit Institutions and the United Nations Department of Economic and Social Affairs to develop a handbook on SAIs’ contribution to strengthening budget credibility through external audits.

Many countries continue to underspend in key areas. Our latest analysis tracked deviations across 7 sectors related to 10 global goals in 13 countries. We found that water and sanitation, gender and the environment were the sectors where underspending was the most prevalent.

The most significant challenge when trying to identify and explain budget deviations is finding and obtaining access to relevant data. Spending on gender, in particular, is hard to track, with only Senegal, Mexico and Argentina establishing systems to track and analyze spending on gender across ministries and programs. Another challenge is the relative lack of attention that budget credibility has attracted—thus allowing government under-spending to slip under the radar.

Together with our partners and country teams, we are conducting in-depth research and advocacy in Ghana, Indonesia, Nigeria and Senegal. We are leading research and analysis into the causes and impact of budget credibility issues in selected government service delivery programs, especially essential services that are relied upon by vulnerable populations. These include fertilizer subsidies in Ghana, fuel subsidies for fisherfolk in Indonesia, primary healthcare and agricultural inputs for women farmers in Nigeria, and sanitation services in Senegal. In collaboration with the UN Department of Economic and Social Affairs, we are engaging SAIs to share and document good practices and develop a handbook for SAIs to assess and address budget credibility via their audits.

Key Takeaways

14%

of aggregate national budgets goes unspent in low income countries

30%

of immunization budgets went unspent in a survey of 22 countries.

1/2

of the budget allocations for gender ministries and programs was not spent in Ghana, Nigeria, and Zambia between 2018 and 2020

Where We Work in this Area

TAKE ACTION

Demand Budget
Credibility

Join us and our many international and national partners to urge governments to:

  1. Establish meaningful, inclusive spaces to engage the public in budget processes.
  2. Curtail executive overreach and empower legislators and auditors’ oversight roles.
  3. Disclose more and better budget information.
  4. Sustain progress by institutionalizing accountability reforms.

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