On Dec. 16, 2020, the Finance Ministry of the Republic of Indonesia and IBP held a high-level, virtual panel, “Getting it Right: Promoting Equity and Accountability in the COVID-19 Response,” which focused on equity and accountability in emergency public spending and how we can strengthen the role of civil society in monitoring these expenditures. The event garnered international media coverage from major outlets in Indonesia and Kenya and more than 3,300 viewers from across Canada, Ghana, India, Indonesia, Italy, Mexico, Senegal, South Africa, Tajikistan, United Kingdom and the United States.
Moderator Beena Pallical, General Secretary, National Campaign on Dalit Human Rights was joined by Gene Dodaro, Comptroller General, United States of America, Kristalina Georgieva, Managing Director, International Monetary Fund, Sri Mulyani Indrawati, Minister of Finance, Republic of Indonesia and Warren Krafchik, Executive Director, International Budget Partnership for a conversation on the choices governments make while channeling public resources to combat COVID-19 – choices that will determine how many lives are saved and how many people fall into poverty.
As governments continue to implement COVID-19 response and recovery programs, many civil society groups are asking how the crisis will impact governments’ ability to spend money effectively and deliver essential services. For civil society groups that are following the COVID-19 money trail, there are critical questions about budget credibility, or whether governments will actually spend the money allocated in their budget during their fiscal year.
The unpredictable impact of the COVID-19 crisis on government revenues and expenditures could create understandable reasons why governments may deviate from their planned or adjusted budgets in the coming months and years. At the same time, a lack of budget credibility can increase the risk that shifts in spending priorities may also result in cuts to essential funding for non-emergency services that people need—such as for education and routine health services.
One way of identifying potential risks for budget implementation in the current context is to look at the impact of previous health emergencies, such as the Ebola crisis that impacted several West African countries in 2014 and 2015. Reviewing lessons from two of the most impacted countries—Sierra Leone and Liberia—can help understand how government budgets change in response to a crisis and how these changes can impact budget credibility. Drawing on available budget documents and PEFA assessments that cover the Ebola crisis years, here are three key lessons about what we see—or do not see—in terms of government budget credibility during that crisis.
1. Transparency is needed to understand budget credibility during a health emergency.
During the Ebola emergency, governments were making critical decisions about where to spend and where to cut. But what were those decisions and how did they impact government services?
These questions should be answered in government budget documents that provide an official account of how public resources were raised, allocated and spent, along with explanations of changes and deviations in the budget during the year. Unfortunately, good practices on budget transparency were not in place for the countries impacted by the Ebola crisis. The Open Budget Survey (OBS) assessment covering this period in Liberia and Sierra Leone found that both countries’ transparency scores declined as compared to the previous assessment. Moreover, critical budget execution documents were not published online or were published late. In Liberia, the government was producing these documents but released them only years later, far too late to be of use to civil society organizations (CSOs) that were monitoring the government response.
Availability of budget execution documents assessed in OBS 2017
Even published budget documents had significant gaps in information, such that they did not allow comparisons between actual spending and budgeted allocations. For example, Sierra Leone’s In-Year Reports, the monthly Statement of Fiscal Operations, showed expenditures by overall sectors (functional classification) and type of spending (economic classification), neither of which is comparable to the initial budget, which is approved by each ministry (administrative classification).
One area with stronger accountability during the Ebola crisis was the rapid auditing of emergency spending. The supreme audit institutions (SAIs) in both Sierra Leone and Liberia conducted and published rigorous audits of emergency funds, which uncovered waste and mismanagement of spending during the crisis and led to governments addressing some of the problems identified. In contrast, regular audits of government spending did not fully investigate impact of the crisis. Neither of the audit reports for government financial statements in Sierra Leone or Liberia explained changes made to budgets, in part because the SAIs did not receive this information from the government. In Liberia’s case, the regular audit report for 2014/2015 was also delayed in publication, undermining transparency for the rest of government spending – released only four years later.
2. Credibility is an ongoing issue during a crisis.
As governments responded to the Ebola health emergency, they adjusted their budgets in similar ways to what we see in recent months in response to COVID-19, prioritizing the emergency response and economic stimulus efforts. Even with these revised priorities, budget implementation practices followed similar trends as in earlier years.
Budget execution data for the years of the Ebola crisis can be found in in the PEFA reports for Sierra Leone (2018) and Liberia (2016). PEFA assessments examine budget credibility in terms of aggregate expenditures and the composition of the budget (spending by ministries) from the central government: in Liberia, this included on-budget donor expenditures, while in Sierra Leone donor expenditure data was not available.
The PEFA report shows that the government in Liberia struggled with accurate revenue forecasts before the crisis that led to underspending, but budget credibility trends varied by sector. In spite of more pronounced underspending in the health ministry when compared to education or defense, the overall execution rate in Liberia actually improved during this period.
For Sierra Leone, the PEFA report shows that overspending was the norm before the crisis, and this continued to a lesser degree during the Ebola response years. Like Liberia, deviations varied by sector – for example, despite overspending in health and defense sectors in Sierra Leone, the budget for the education ministry was underspent.
At a more detailed level, budget variances can become extreme. For example, official data indicates that an administrative unit known as “Miscellaneous Services,” which includes contingency expenditures, was significantly overspent during the crisis, but no explanations were provided to explain why this happened or how the money was spent.
Sierra Leone PEFA: Actual spending in key sector ministries as a share of the initial approved budget
Liberia PEFA: Actual spending in key sector ministries as a share of the initial approved budget
Thus, on an aggregate level, the Ebola crisis for Sierra Leone and Liberia resulted in slight improvements in budget execution rates, rather than increased fluctuations, as might be expected.
However, these aggregate values can mask large shifts within budgets that potentially can undermine credibility. For example, In Sierra Leone, official data indicates that an administrative unit known as “Miscellaneous Services,” which includes contingency expenditures, was significantly overspent during the crisis, but no explanations were provided to explain why this happened or how the money was spent.
Contingency expenditure in Sierra Leone (in millions, PEFA)
In the same time period, Sierra Leone also increased their accumulation of payment arrears from one percent of expenditures before the crisis to 17 percent of expenditures in 2016. These arrears, which are obligations where the government is late or delayed on payment, are often not reported in budgets and can potentially hide overspending practices. Such changes make it hard to track in government reports where the money goes and how it is being used and can mask credibility problems in the overall budget or specific programs.
3. Altered systems for emergency spending make it harder to track budget credibility.
The need for a rapid response in the Ebola crisis led governments to use different public financial management arrangements during their response. In both countries, the PEFA reports document shifts that governments made in their budgets during the emergency response, but with varying degrees of accountability and transparency. In the case of Liberia, these shifts were discussed with the legislature before being implemented and were not large enough to warrant a formal supplemental budget. In Sierra Leone, overspending was large enough to require a supplemental budget from the legislature, but after 2014 no supplemental budgets were submitted or approved.
In addition to revising public spending, governments were also setting up extra-budgetary funds to manage emergency spending. Extra-budgetary funds promised rapid delivery of services that could circumvent the slower machinery of government systems, including normal oversight practices. In many cases, new extra-budgetary funds were created due to the demand of donors. However, such funds also obscure the total amount of public resources directed to the crisis. By the end of the crisis, only 23 percent of donor financing was disbursed directly to all affected countries public finance systems, with the majority channeled either in extra-budgetary funds or implemented directly through development partners. Off-budget donor funding also has the additional challenge that government auditors in Sierra Leone and Liberia either did not have the mandate or access to donor accounts to audit where and how donor funding was spent.
How should lessons from the Ebola emergency inform the COVID-19 response?
As governments begin implementing their COVID-19 response efforts, often using similar tactics to those used during the Ebola response, we should watch out for similar pitfalls. These include:
Lesson 1: Transparency can regress. Lack of transparency makes it very challenging for CSOs and other stakeholders to conduct timely analysis of emergency spending practices and thereby seek remedial actions from the government during the period of the crisis. CSOs and other stakeholders must insist that governments prioritize transparency and the timely publication of data—transparency and accountability build the trust that is needed to combat the virus.
Lesson 2: Governments tend to use new instruments and PFM arrangements during a crisis. These include supplemental budgets, extra-budgetary funds, contingency reserves or funds and increases in expenditure arrears. Civil society should track these changes and monitor potential risks in these new systems. A special series of notes on COVID-19 from the IMF is a good resource for learning about how PFM systems are changing and what good practices should be adopted.
Lesson 3: Prioritized audits of emergency spending measures can come at the cost of routine audits of government spending. Auditors should formulate audit plans that ensure that all public funds are assessed. Routine audits of government financial statements—which will still account for most government spending—should look at spending deviations during the crisis. Additional support and funding to SAIs will allow them to take on this expanded mandate. CSOs and other stakeholders that are demanding that SAIs conduct expedited audits should also insist that regular audits continue, especially for programs at risk of mismanagement.
Lesson 4: Trends in deviations can continue during times of crises. Importantly, these trends hold true not just for aggregate budgets but also for the budgets of individual ministries and sectors. CSOs can use evidence of previous spending patterns to push back against unjustified claims made by government that budget deviations are only due to the crisis.
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.
Social protection policies play a fundamental role in sustaining minimum living conditions for the most vulnerable, and during COVID-19, an increasing number of countries are adopting specific social protection measures to counteract the economic impact of the pandemic. According to the World Bank, as of June 2020, at least 131 countries have put in place conditional or unconditional cash transfers schemes to protect the most marginalized populations. Cash transfers are by no means a new policy tool; they have proven effective to prevent households from falling below subsistence levels in various settings. However, the pandemic is testing these policies as never before and raising new concerns around their effectiveness, spurring the International Budget Partnership (IBP) and our partners to examine how we can improve and transform these programs.
Cash transfer programs: a global success story, but with persistent challenges
COVID-19 presents an unprecedented challenge to economies around the world and its impacts will be felt the most among the most marginalized individuals in society. Economy-wide lockdowns, overwhelmed health care systems and quarantines are already impacting the most vulnerable and could push a staggering 71 to 100 million people into extreme poverty by the end of 2020, with many of those individuals living in regions that are already impacted by poverty-related challenges.
Rigorous evaluations of cash transfer programs have supported their implementation to fight poverty all over the world since the 1990s. Nevertheless, even before the pandemic, these programs had certain weaknesses, such as inadequate targeting mechanisms, improper implementation and insufficient benefit levels. As cash transfer programs have been expanded to respond to the pandemic, these limitations, as well as some newer constraints, have come into sharper relief. Inspired by the work of our partners within our Learning Network, we will collaborate to confront the limitations of current cash transfer policies and deepen our collective thinking and advocacy around income support.
Here, we highlight five of the many issues that we hope to explore further as an organization and alongside our Learning Network partners.
How can we improve targeting approaches that currently prevent eligible recipients from receiving benefits? Even before the pandemic, many cash transfer programs suffered from challenges in reaching the right beneficiaries, starting with the extent and quality of information available to facilitate proper targeting. In countries with limited administrative capacity, reaching individuals that live in informal settings or otherwise lack official records can be particularly difficult.
In Indonesia, the government launched a relief scheme for workers earning less than Rp 5 million per month in September 2020. The program targets employees who have been registered in the Workers Social Security Agency by their employers, however, according to the Indonesian Forum for Budget Transparency (SEKNAS FITRA), the agency did not include a number of eligible workers. They argue that the government should collaborate with trade and labor unions to improve the identification process, while a complaint center could be established for workers who meet the requirements but are not yet included.
In South Africa, the Public Service Accountability Monitor (PSAM) along with the Budget Justice Coalition (BJC) have raised concerns about the government’s pandemic relief package which requires banking details, proof of residence and identity documents, thereby excluding millions of individuals living and working in informal areas.
Can cash transfer programs be expanded so that more of those in need are included? Traditionally, most cash transfer programs are narrowly targeted to the poor, the extreme poor and specific sectors. Cash relief programs introduced during the pandemic have also been designed to benefit the most vulnerable individuals but given the scale of the impact of COVID-19, many more households now fall in that category.Arguments are being put forward to substantially expand the types of households that might qualify for such support and how we define who qualifies. Some of IBP´s partners are also encouraging their governments to expand access to cash assistance to a much wider range of groups.
CBGA in India maintains that the provision of Rs. 500 (USD$ 6.50) for three months to poor women is too low and have called for a cash transfer scheme of at least Rs 7.000 per household for three months to effectively help families as a whole. They also propose expanding the existing PM-KISAN program to ensure landless agricultural workers are not excluded.
Can cash transfer programs be fortified to operate on a more permanent basis instead of an ad hoc response to crises? The COVID-19 pandemic is not the first global crisis that governments have had to navigate, nor will it be the last. It is worth exploring how cash transfer programs can evolve into automatic entitlements rather than ad hoc emergency responses. Resolving this might mean permanent extension of some programs or the introduction of rule-based entitlement schemes (e.g., when unemployment rises, some schemes automatically start or expand without further authorization needed).
Do we need programs that do more than fight extreme poverty? Initially created to address extreme poverty, it is now worth asking if cash transfer programs can and should do more to address the structural inequities that exist in many economies and be improved to provide support to all those who need it. This might involve moving beyond current conceptions to universal basic incomes, full employment guarantees or increased redistribution through taxation to support aggregate demand.INESCin Brazil initially advocated to expand the support devised by the government, calling for a three-month emergency basic income to the poorest. The government reacted by approving a proposal consisting of three installments of 600 reais per month. However, by partnering with multiple organizations, they now seek to establish a permanent basic income system.
Who’s going to pay for this? Governments will need to ask themselves how to pay for social protection programs like cash transfers, especially as they expand in times such as the pandemic and addressing the challenges discussed above could be prohibitive. Context matters here and some governments have access to easier finance and more domestic borrowing than others.
Looking ahead
With no end in sight to the economic fallout of the pandemic, cash transfer programs will likely continue to be a critical resource for governments looking to support their constituents. Moving forward, IBP – alongside our partners – will be facilitating discussions and collaborations on these programs around the world to not only understand what’s working and what’s not working but to explore different ways of working on various policy areas more broadly. Watch this space for updates and opportunities to join the conversation.
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.
The Open Budgets Blog features content related to transparency, participation, and accountability in government budgeting; civil society budget analysis and advocacy; and public finance management.
Posts are the responsibility of their authors and do not necessarily represent the views of the International Budget Partnership, our donors, or partners.
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 
For example, recent research by UNICEF and the International Budget Partnership found that one-third of the budget for