by [email protected] | Dec 9, 2022
According to Public Expenditure and Financial Accountability assessments from 2008 and 2014, South Africa has maintained high levels of budget credibility at both the aggregate level and the individual vote level. The small variation recorded in these reports has been attributed to a strong link between budget formulation and execution. There does not appear to have been a more recent review or an assessment of budget credibility at the vote or sectoral level.
This brief explores challenges and improvements in South Africa’s budget allocation, implementation, and overall credibility and shows how these measures impact service delivery, poverty reduction, and progress toward the Sustainable Development Goals (SDGs). The brief analyzes South Africa’s budget allocation and execution in seven sectors related to 10 SDGs and covers the budget years 2018-19 to 2020-21. The brief also draws from South Africa’s 2019 Voluntary National Review, which offers a self-assessment and reflection on the impact of government policies and programmes toward attaining the SDGs.
While South Africa has made developmental progress since the advent of democracy in 1994, the country remains among the most unequal societies in the world, with extreme poverty and inequality and high levels of unemployment. Despite early and ongoing support for the 2030 Agenda for Sustainable Development, several acute challenges remain, and significant coordination, leadership, and improved accountability mechanisms will be required to realize Agenda 2030.
Goal 16 of the SDGs—on peace, justice, and effective institutions—recognizes that accountable and inclusive institutions are central to people’s wellbeing and underpin government efforts to reach SDG targets in other sectors. In particular, under target 16.6, which aims to “[d]evelop effective, accountable, and transparent institutions at all levels,” indicator 16.6.1 gauges budget credibility by measuring “[p]rimary government expenditures as a proportion of original approved budget, by sector (or by budget codes or similar).” This indicator relies on the South Africa: Budget Credibility and the Sustainable Development Goals methodology for measuring Budget Reliability in the 2016 PEFA framework, which assesses whether governments spend as intended in the budgets approved by legislatures. While data on indicator 16.6.1 currently reports budget deviations at an aggregate level, there is not yet a consolidated reporting mechanism for the indicator showing deviations in each sector. This means that many countries may not be tracking or identifying which sectors are effectively deprioritized during budget implementation.
Key findings include:
- South Africa has good credibility patterns on an aggregate level; however, at least two sectors—agriculture and gender equality—show consistent underspending trends.
- Some of the more significant deviations in 2020 were the result of additional support required to alleviate impacts of the Covid-19 pandemic, represented and explained in the 2020 supplementary budget; however, the final approved budget allocations were not published, so spending patterns were assessed against the initial allocation. Gender equality is analyzed using the allocation and spending for women in the Department of Women, Youth and Persons with Disabilities
- Challenges remain for achieving the SDG goals assessed in this brief, and most show a stagnating or declining trend, with the exception of gender equality, which, according to the SDG dashboard indicators, has improved. The persistence of Gender Based Violence in South Africa suggests that the indicator only provides a partial insight into issues of gender equality in South Africa.
- Although South Africa has not as yet fully implemented a gender-sensitive budgeting approach, various departments, led by National Treasury, are making progress with establishing the necessary guidelines and requirements to integrate the Gender Responsive Planning, Budgeting, Monitoring, Evaluation, and Auditing Framework into the budget process.
- Efficiency and effectiveness of expenditure remains a concern, and several challenges with regard to expenditure management (including poor internal controls, irregular expenditure; and fruitless and wasteful expenditure) could be contributing to poor alignment between budget allocation, spending, and SDG outcomes.
Download report
This publication is a part of Connecting Budget Credibility to the Sustainable Development Goals
by [email protected] | Nov 24, 2022
Zambia considers the 2030 Agenda for Sustainable Development as a national agenda. The government’s efforts to address development challenges resonate with the goals agreed in this global Agenda (Zambia VNR, 2020). This brief reports on budget credibility trends in Zambia and how they relate to Zambia’s efforts to achieve the Sustainable Development Goals (SDGs). Budget credibility is the ability of governments to meet their expenditure and revenue targets accurately and consistently (IBP, 2018). Where governments consistently miss these annual targets, these issues can indicate underlying challenges within the public financial management (PFM) system in ensuring that funding flows toward achieving the government’s stated priorities. If unaddressed, such challenges have the potential to undermine the country’s goals on effective service delivery and poverty alleviation.
Budget credibility challenges in Zambia are widely discussed amongst civil society organizations as well as media practitioners. Deviations from the approved budget pose a governance challenge and are a threat to national development. This concern has been more pronounced in the wake of continued reduction of budget allocations (as a percentage of the total budget) for social sectors. The government has not significantly increased budget allocations to strategic social sectors such as health, education, water and sanitation despite endorsing international commitments and recommended thresholds to improve public services.
We reviewed budget credibility patterns from 2018 to 2020 in seven key sectors3 that relate to 10 SDG goals, using available budget data by ministries, tracked spending on gender equality, and reviewed allocations on social protection programs. While social sector spending figures have nominally increased, they remain below optimal thresholds. In 2022, the government allocated 45 percent of the national budget towards debt servicing, diverting needed funds away from social sectors. This analysis aims to demonstrate how Zambia’s current performance on budget credibility can potentially impact wider efforts to achieve SDGs. We conclude with some recommendations for improving budget credibility for SDGs and overall development goals.
This research found that at the aggregate level and in some sectors, spending was largely underspent over three years (2018-2020, see annex 1), which raises issues of budget credibility. Budget deviations were highest in the agriculture sector at over 236 percent (overspend) and lowest in education at 15 percent (underspend). Water and sanitation, though among the least funded (as a percentage of the budget), was one of the sectors with high budget variations (70 percent underspend). Climate action was the only goal on track, even with one of the least budget allocations among the sectors under study. This may be linked to higher political will to spending in this sector, following two recent keys actions: Zambia’s signing of the Paris Agreement on Climate Change in in September 2016 and the launch of the National Climate Change Policy in March in 2017.
The continued discrepancy between the approved budget and actual budget, and the consistent underspending of the budget, takes place in the context where debt servicing concerns dominate government discussions of public finance. High debt servicing costs have limited the government’s expenditure towards key economic and social sectors. The discrepancy between the Constitution and existing laws such as the Loans and Guarantees Act (LGAA) on authorizing loan approvals before contractions have further exacerbated the debt crisis. These dynamics may lead to government putting less pressure on line ministries to execute their entire approved budgets, given the limits on the overall availability of public funding.
The onset of COVID-19 had mixed results in terms of expenditure. For example, the increased allocations to sectors such as health and water and sanitation did not translate into better spending. Deviations for health increased from underspending of 23 percent in 2019 to underspending of 27 percent in 2020. In water and sanitation, the deviation reduced to underspending of 62 percent from a high of underspending of 89 percent in 2019. The 2020 deviation was, however, still higher than the 2018 deviation of underspending by 58 percent. Social protection also saw deviations maintain a downward trajectory from underspending by 51 percent in 2018 to underspending by 8 percent. Agriculture on the other hand saw spending increase to 563 percent from 181 percent overspending in 2019.
The research recommends the following:
- Lack of publicly accessible budget information is a serious impediment to achieving budget credibility in Zambia. To enhance transparency, the government should publicly publish blue books which contain the actual approved budgets as well as actual expenditure including justifications for any deviations. This can increase awareness amongst actors with a direct stake in timely SDGs achievement.
- There is need for consistent and more regular reporting on progress made on the SDGs. Government should publish the VNR in a timely manner and report on SDG 16.6.1 on budget credibility.
- To improve budget credibility, it is critical to assess spending beyond budget provision. Better tracking and reporting on SGD trends and budget allocation and expenditure can help activate a positive policy feedback loop.
- Gaps between existing laws and the Constitution should be addressed to ensure transparency and avoid future debt troubles. Government should put in place legal frameworks to manage the debt crisis.
- Government should honor international protocols and agreements on key sectors related to SDG targets, and the SDG index trends and performance.
Download report
This publication is a part of Connecting Budget Credibility to the Sustainable Development Goals
by [email protected] | Nov 10, 2022
To turn their plans and commitments toward the Sustainable Development Goals (SDGs) into actions, governments must ensure that the budgets they allocate toward the SDGs are properly executed. Many countries face challenges in meeting their planned annual expenditure and revenue targets, resulting in shortfalls and compromising their governments’ budget credibility. This challenge is acknowledged in SDG indicator 16.6.1, which measures actual government spending in comparison to approved budgets.
Where there are gaps between planned and actual expenditures, these can owe to high and persistent levels of inflation, which are often underestimated in approved budgets. In Argentina, runaway inflation has prompted significant budget modifications,1 with percentages that, between 2018 and 2020, fluctuated between 14 and 44 annual percentage points over the total budget. With that as context, this report examines budget credibility trends in seven sectors related to ten SDGs, analyzing the differences between Argentina’s approved and executed budgets in 2018, 2019, and 2020. It also compares these spending patterns with the country’s progress in achieving the SDGs, as shown by Argentina’s results in the 2021 Sustainable Development Report.
The analysis found no evidence demonstrating that the Government of Argentina is prioritizing resource allocation toward sectors where more progress is needed to achieve the SDGs, except for in the cases of social protection, gender, and health. Data on the health sector, in particular, reflects a 2020 legislative delegation on budget reallocations, which empowered the national executive to easily transfer resources from non-priority budget items to slow the spread of COVID-19.
Download report
This publication is a part of Connecting Budget Credibility to the Sustainable Development Goals
by Dammy | Aug 8, 2022
Effective climate budgeting requires meaningful participation and systematic public engagement. Without these it is difficult for governments to provide climate financing that aligns with household priorities, and households will continue to spend large amounts of money responding and adapting to climate change without, and sometimes against the flow of, public financing.
Using a case study approach, this paper explores the role of public participation in climate budgeting in Nepal, Bangladesh, and Indonesia by assessing these governments’ adherence to the Global Initiative for Fiscal Transparency (GIFT) principles of public participation in fiscal policy. It also analyses secondary data on household climate and disaster priorities against government climate and disaster expenditure estimates, and finds that households in these countries are significant financiers of climate resilience. But their governments are not yet enabling households to meaningfully participate throughout the public financial management (PFM) process that would lead to better alignment and targeting of the public climate budget.
The paper also identifies cross-country learning and makes recommendations to support improvements in public accountability and participation processes, particularly through interventions to improve national adherence to the GIFT principles. Download the paper.
by [email protected] | Jun 27, 2022
Ghana’s efforts to achieve the Sustainable Development Goals (SDGs) by 2030 face major challenges, with rapid progress still needed in sectors related to the goals on hunger, gender equity and health. To accelerate progress toward development goals, Ghana needs to effectively mobilize domestic and international financing for programs that can address these challenges. National budgets are central to this effort; however, many governments deviate from planned budgets during implementation, a challenge known as budget credibility, which can result in shortchanging or deprioritizing spending in social sectors. The SDGs recognize this challenge with tracking indicator 16.6.1, which looks at government expenditures as compared to the approved budget, however, in many countries, including Ghana, public discussion around funding on the SDGs focuses more on allocations than implementation.
The government has shown its commitment to tracking investments toward the SDGs by publishing a budget report that shows allocations according to the SDGs. However, data has not been released about expenditure according to those allocation targets. This brief therefore looks at budget credibility patterns from 2018 to 2020 in seven key sectors that relate to 10 SDG goals, using available budget data from ministries as a proxy for SDG spending in the absence of more formal tracking systems for budget execution information on SDG spending. This analysis aims to show how Ghana’s current performance on budget credibility can potentially impact wider efforts to achieve the SDGs, and provides recommendations for how the government, development partners and civil society can expand awareness and action about budget credibility in SDG and development goal discussions. Download the paper.
