SA tops for budget transparency

Mary Alexander

With South African Finance Minister Trevor Manuel having presented his annual budget to parliament on Wednesday, the country’s government budgeting system has been rated as the second most transparent in the world – ahead of such wealthy democracies as the US, New Zealand, Norway and Sweden.

This is according to the International Budget Partnership’s (IBP) recently published Open Budget Survey 2008, which evaluates whether central governments give the public access to budget information and opportunities to participate in the budget process, and examines the ability of legislatures and auditors to hold their governments accountable.

According to the survey, the world’s most transparent countries are the UK (with a score of 88 out of 100), South Africa (87), France (87), New Zealand (86), and the US (82).  The survey classified these five countries as “providing extensive information”.

“These top performers include both developed and developing countries,” the IBP said. The organisation said in a press release that the strong showing of South Africa, as well as that of Slovenia, Sri Lanka, and Botswana (all of which provide significant information to their people), demonstrated that developing countries can achieve transparency given sufficient willingness of their governments to be open and accountable to their people.

In this map blue denotes a country that provides extensive budget information to its public, green countries that provide significant information, yellow for those providing some information, orange for minimal information, and red for scant or no information.
(Source: Open Budget Initiative)

Alarmingly, the report revealed that 80% of the world’s governments fail to provide adequate information for the public to hold them accountable for managing their money.

Nearly 50% of 85 countries whose access to budget information was carefully evaluated by IBP provide such minimal information that they are able to hide unpopular, wasteful, and corrupt spending.

To simply measure the overall commitment of the 85 countries to transparency and to allow for comparisons among countries, IBP created the Open Budget Index (OBI) from the Open Budget Survey 2008.

Good stewards of public funds

A budget is a government’s plan for how it is going to use the public’s resources to meet the public’s needs. Transparency means all of a country’s people can access information on how much is allocated to different types of spending, what revenues are collected, and how international donor assistance and other public resources are used.

Transparency is an important first step to holding governments accountable for how they use the people’s money.

“Open budgets are empowering,”  says Warren Krafchik, IBP’s director. “They allow people to be the judge of whether or not their government officials are good stewards of public funds.

“Our goal is to promote increased public access to government budget information. We’ve seen how this can lead to concrete improvements in people’s lives.”

Key documents

The index score is largely based on whether a country makes eight key documents available to the public. These are the pre-budget statement, executive’s budget proposal, citizens’ budget, enacted budget, in-year reports, mid-year review, year-end report, and audit report.

It found that only three of the five top countries – the UK, South Africa and New Zealand – publish all eight key documents, including a citizens’ budget. France does not produce a mid-year review, while the US publishes neither a pre-budget statement nor a citizens’ budget.

“Citizens’ budgets are important instruments to more broadly disseminate budget information and generate greater understanding and engagement in the budget process,” the IBP says. A citizens’ budget presents the government budget in a non-technical, easily understandable way.

Of the 85 countries in the survey, 68 do not publish such a document, even though it would require no further data or analysis to produce.

But 17 developed and developing countries do produce a citizens budget. The survey noted that several countries, including South Africa, publish the citizens’ budget online.

South Africa also has the online “Tips for Trevor” system, in which ordinary citizens can send budget suggestions to Finance Minister Trevor Manuel.

Where the public’s access to the internet is limited, the citizens’ budget is another way to inform the public about the budget and can be published in newspapers and magazines or broadcast on radio and TV.

In Colombia, Niger, and South Africa, some civil society groups regularly present updated budget information orally on the radio.

“For most people, an oral presentation is the most accessible,” Krafchik says.

Few governments are transparent

“Restricting access to information hinders the ability of the public, journalists, commentators, academicians, and civil society organizations to hold officials accountable and creates opportunities for governments to hide unpopular, wasteful, and corrupt spending,” the IBP says.

Lack of information also hinders the ability of other government bodies, such as legislatures and national audit offices, to do their jobs effectively.

More than this, legislators in many countries receive budget information too late to allow them to adequately review it or to hold the public hearings necessary to foster debate and careful scrutiny.

The survey found that in 24 of the 85 countries, the legislature received the budget six weeks or less before the budget year begins.

The worst offenders – the countries that make scant, if any, information available – are Saudi Arabia, Algeria, Democratic Republic of Congo, Sudan, Rwanda, Equatorial Guinea, and São Tomé e Príncipe.

Unpopular, wasteful and corrupt

Lack of transparency allows governments to hide unpopular, wasteful, and corrupt spending, the IBP says, citing these example:

  • Oil-rich Equatorial Guinea bought a US$35-million vacation home for its president in Malibu, California, according to a US Senate investigative committee. This was $10-million more than the government’s budget showed the country planned to spend on health care for its impoverished population in 1995.
  • Saudi Arabia, which holds an estimated $400-billion in assets from oil profits, makes so little information available that it is not clear what spending is accounted for in public documents and what spending is not reported in public documents. Saudi Arabia publishes almost no budget documents at all, providing only a very scant summary of the budget and some highly aggregated information on the overseas holdings managed by its central bank.
  • Nicaragua’s government refuses to account for funds from oil-rich Venezuela that apparently have been used for undocumented loans to government-linked companies and to reward them with no-bid contracts for projects being built on public land.
  • In Nigeria, two top officials resigned when it was discovered that they had pocketed unspent funds from the 2007 budget as their end-of-the-year Christmas bonus.

Information leads to change

According to the IBP, when citizens have access to information and opportunities to participate in the budget process, they are able to improve the decisions made about what to spend public money on and the quality of how the money is actually spent. That means that the allocation of scarce public resources is more equitable and effective.

For example:

  • In Mexico, the NGO Fundar found the budget did not allocate funds to combat the loss of lives during childbirth and successfully advocated for funds for emergency obstetrical care, especially in rural areas.
  • In India, Mazdoor Kisan Shakarti Sangathan, an organisation of small farmers and workers, pieced together budget information to uncover corruption, such as the names of dead people and fictitious names on payrolls and payments for work never done.
  • At the urging of the Uganda Debt Network, which monitors local spending, Ugandan officials identified substandard work in school construction and evidence of corruption by local officials and denied payment to the construction firm.
  • In the Philippines, Government Watch has used budget information since 2000 to monitor the delivery of school textbooks, the construction of new schools and other infrastructure, and of the distribution of disaster relief funds. With the cooperation of other groups, these efforts have dramatically cut the cost of textbooks to the government, improved the quality of the books, and substantially lowered the percentage of “no-show” contractors who previously failed to deliver contracted books.
  • Public Service Accountability Monitor, in South Africa’s Eastern Cape Province, has used budget reports and other information it obtained as a starting point to monitor the misuse and irregularities in funds budgeted for essential services, such as education, health care, and clean water, that account for the poor quality of services people receive in the province.

Slight improvements over two years

The first Open Budget Survey was completed in 2006, when 59 countries were studied. The 2008 Survey includes 85 countries, chosen to provide a balanced geographic sample of countries around the world.

There is a slight improvement in the 59 countries where the study was repeated, the IBP says. Based on comparative data from the first two Surveys, improvements in overall performance can be attributed primarily to changes in government policies. For instance, the desire to join the European Union led to greater budget transparency in Bulgaria and Croatia.

Changes in the way the government produced information led to Sri Lanka’s improvement in both quality of information and the amount of information available to the public.

Nepal climbed a bit from the bottom of the index largely because a constitutional crisis resulted in an election that led to more normal function of previously dysfunctional government institutions.

Other countries that showed improvement include Ghana, Egypt, Uganda, Georgia, Indonesia, El Salvador, Ecuador, Mongolia, and Morocco.

In several of the cases in which improvements were observed, governments were able to significantly increase access to information by simply releasing that which they already produced.

“The findings suggest that access to information can easily be improved at minimal cost and in relatively little time,” Krafchik says.

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