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.
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.
The Open Budget Survey 2017 recorded a global decline in average budget transparency scores for the first time since the survey’s inception. Nowhere was this decline more pronounced than in sub-Saharan Africa, in which 15 countries saw their Open Budget Index (OBI) scores drop by more than five points. A recent post examining this backslide attributes most of it to a reversal of previous practices, as a significant number of previously published budget documents were either not published, published late, or not posted on government websites.
Highlighting a lack of institutionalization of budget transparency practices as a potential cause for the reversal, the post’s authors emphasize the need for governments to “engrain” the publication of budget documents into standard public finance procedures and activities. They posit that institutionalizing transparency through, for example, laws and regulations, would make budget information accessible to citizens in a more regular and predictable manner.
going beyond the inclusion of transparency provisions in legislation, and focusing on the implementation of the provisions;
ensuring that broader budget reform strategies include transparency components and activities;
using digital tools to disseminate budget information (for example, the creation of budget transparency portals); and
introducing institutional measures to coordinate transparency efforts and ensure reform implementation, such as establishing dedicated units responsible for publishing budget information.
Based on these findings, IBP worked with the Collaborative Africa Budget Reform Initiative (CABRI) last year to survey African governments on the degree to which they had similar initiatives in place. Survey questions addressed: 1) the specificity of legislation concerning the publication of key budget documents; 2) the entities responsible for ensuring budget information is published – e.g., the existence of a dedicated unit within the finance ministry; 3) whether governments had a dedicated website/page for budget documents, and if said website was regularly updated; and 4) if government reform strategies or plans included key budget transparency measures. Finance ministry officials from 22 countries responded, 17 of which are covered by the Open Budget Survey. Among these, only one (Senegal) improved its OBI score significantly between 2015 and 2017.
While it is not easy to identify very clear linkages between Open Budget Survey results and institutionalization of budget transparency reforms from the limited information gathered from the IBP-CABRI survey, a few interesting cases stand out.
The two countries with the most significant decline in OBI scores were Botswana (-39 points) and Tanzania (-36 points). In each, governments either published various documents too late to be relevant for public debate or failed to post them online, despite both countries having well-functioning websites during the research period[i]. We were not able to ascertain any reasons for such delays and inconsistencies; however, it should be noted that Botswana’s institutionalization of budget transparency practices is very limited. Its public finance legislation does not contain specific budget transparency provisions, there are no government units directly responsible for publishing budget information, and budget reform strategies generally do not mention transparency as a priority. In contrast, in Tanzania the 2015 Budget Act has very specific provisions for the publication and dissemination of different budget documents and the public finance management (PFM) reform strategy includes a number of activities related to the promotion of public finance transparency. These reforms indicate that Tanzania is ahead of Botswana in institutionalizing budget transparency, but the implementation of the reforms is lagging, possibly due to political transitions after the 2015 elections and the lack of political will by the current government, which is seen as increasingly authoritarian.
Senegal is one of the most improved countries in regards to OBI score, as highlighted in the Open Budget Survey 2017 global report. Here, the government has taken clear steps to institutionalize budget transparency practices. They updated their legislative framework in 2012 in line with regional WAEMU (West Africa Economic and Monetary Union) directives, and their Transparency Code now includes provisions for the government to publish five of the eight key budget documents considered in the Open Budget Survey. The government’s budget reform strategy includes various transparency provisions, and the Cellule de Communication within the Ministry of Economy, Finance and Planning is tasked with ensuring that all budget documents and reports are published. Furthermore, the General Directorate for Finance has its own website where budget documentation is posted.
Other WAEMU member countries, however, provide interesting examples of how laws and regulations alone may not be enough to guarantee the institutionalization of budget transparency practices. Both Benin and Burkina Faso saw their OBI scores drop in 2017, despite having comprehensive transparency legislation, similar to that of Senegal. Both countries have also put a lot of emphasis on promoting transparency in their recent budget reforms (as a consequence, Benin actually started publishing two budget documents in 2017 that it had not published previously). However, the countries also went through some important political transitions — including the aftermath of a coup d’état in Burkina Faso and a change of government in Benin — right around the time when the Open Budget Survey research was taking place. These isolated events may explain the drop in the countries’ 2017 OBI scores, providing hope for future improvements.
Thus, to better understand how budget transparency practices evolve over time, and why they recently worsened in sub-Saharan Africa, more detailed measures of how the levels of institutionalization of such practices are useful, but often insufficient. They may help us explain some of the reasons behind Botswana’s regression or Senegal’s improvements, but for other countries they only hint at broader factors linked to the political and institutional context that may be at play. The relationship between a government’s overall political commitment to transparency, the way in which this translates into institutional reforms that shape the behavior of public officials, and how such incentives shift over time in response to changing circumstances is a very complex one, and a topic that deserves further attention and research.
[i] More recently, the Government of Botswana has been undergoing a comprehensive revamp of its governmental websites, leading to the website finance.gov.bw no longer being active.
Many governments around the world are making less information available about how they raise and spend public money, according to the results of the International Budget Partnership’s Open Budget Survey 2017.
The most significant finding of the Open Budget Survey 2017 is that after a decade of steady progress, global average government budget transparency has actually dropped. Stalling progress toward greater budget transparency—fueled by outright declines in some countries—is consistent with a broader set of indicators that in recent years point to democratic recession, declining civic space, and faltering commitment to the rule of law around the world. For this reason, the survey’s 2017 findings have faced widespread acceptance in our discussions globally. They are of a piece with the zeitgeist.
At the global release of the Open Budget Survey 2017 in Washington, D.C., and in this blog post, the Open Government Partnership’s Sanjay Pradhan tied the results to rising authoritarianism and closing civic space, drawing on research by Freedom House and CIVICUS. Similar links were drawn by Danny Sriskandarajah of CIVICUS at the London release event, where the U.K.’s Minister of State at the Department for International Development, Harriet Baldwin, also linked the findings to declining press freedom. Manal Fouad of the International Monetary Fund called the results disappointing but not surprising, evoking the more general malaise around poor transparency and declining trust in government that has taken hold in recent years.
Other participants gave examples of related findings from their own work that confirm a trend away from open governance and democracy. For example, the World Bank pointed to declining Public Expenditure and Financial Accountability (PEFA) assessment scores and declining Country Policy and Institutional Assessment scores in West Africa. Colleagues from the Mo Ibrahim Foundation pointed to regression in their indicators of governance for Africa. At the U.S. State Department, officials spoke about lack of transparency of state-owned enterprises emerging from their own transparency assessments, as well as the importance of legislative oversight and the fact that international support for legislatures has been declining in recent years.
Searching for answers
Even as the Open Budget Survey 2017 findings evoke little surprise, they do raise fundamental questions of interpretation. Is declining budget transparency part of a syndrome of democratic decline, that is, just another indicator of decline? Or is it rather a cause (or effect) of other changes in the political and economic environment? Should we see these findings as early indications of a new trend, or simply an unfortunate step backward on an otherwise healthy trajectory? The same question could be asked of what we are seeing at the level of democratic regimes. Are the rise of populism, attacks on media, and the weakening of judicial independence in many countries the new normal, or will they cause publics to react and strengthen democracy in relatively short order?
Explaining findings like stalling progress in the Open Budget Survey 2017 is a hazardous business. Political and social indicators are notoriously noisy. Genuine change takes time, and may take even longer to show up in the indicators we use to measure it. Although both democracy and income are correlated with Open Budget Index (the Open Budget Survey’s measure of budget transparency) scores in a cross-sectional analysis, the Open Budget Survey 2017 report suggests that there are no correlations between changes in democracy indicators or measures of country income and changes in Open Budget Index scores. This is not surprising: while being democratic and wealthy may be associated with greater budget transparency, it is unlikely that modest changes in democracy or income would explain modest changes in budget transparency over such a short period.
There are nevertheless a few relationships worth further exploration. The first is between the Open Budget Index and a measure of deliberative democracy from the University of Gothenburg’s Varieties of Democracy data. This measure looks at the extent of public justifications from government officials for their decisions, which is a measure of the openness of decision making. We find that a decline in this measure is associated with a decline in Open Budget Index score. This is a rather nuanced measure of democracy, in the same way that budget transparency is itself a nuanced measure of democratic practice.
The other correlation we find is between countries issuing sovereign bonds in 2016 and Open Budget Index scores: those countries that issued bonds appear to have had no change in scores, while those that did not fell by nearly six points on our index. This suggests that investors do have leverage over governments, although it is surprising that this leverage is only relevant at first issue: the data suggest that governments appear unperturbed by how their bonds trade in the secondary market (an improbable scenario, unless governments do not intend to borrow more in the future).
Another finding, and perhaps the most revealing, is that countries in sub-Saharan Africa that had increased their Open Budget Index score by more than five points between 2012 and 2015 declined by more on average between 2015 and 2017 than the countries that were not substantial improvers between 2012 and 2015. This, and other analyses of volatility, suggest a tendency for countries to regress to the mean in their transparency practices.
Other theories also circulated in the various global events that discussed the Open Budget Survey 2017 findings. A participant from the International Monetary Fund (IMF) pointed out that the period covered by the survey was a difficult one macroeconomically for a number of countries and that transparency tends to decline when economic news is bad. Others raised the fact that in countries that are fragile or insecure, the incentives to release information, the cost of doing so, and the priority attached to transparency are all likely to be affected negatively (a point also noted in the report, which shows the negative relationship between countries facing recent conflict and Open Budget Index scores). In London it was suggested that the increasing role of China in financing development globally might be leading to a declining emphasis on transparency. One participant at the D.C. event noted that we need to look at the positive trends in Asia as well as the negative trends in sub-Saharan Africa to understand what is actually happening to transparency.
How will we respond to what we heard around the world? Our first commitment is simply to keep watching and establish whether what we have seen is a genuine trend. The results of the Open Budget Survey Document Availability Tracker (our interim measure of the public availability of budget documents, a key component of budget transparency) later this year, and the 2019 survey findings, will help us to understand better whether we are witnessing a new pattern, or the 2017 results represent an anomaly. We will also undertake additional research to understand whether the findings related to sovereign bond issuance hold over time and a larger number of cases. And we will also try to investigate further the declines in Africa (and increases in Asia) to see whether there are any more robust relationships that can be uncovered. This work can investigate some of the variables mentioned by participants in our events, such as the role of insecurity, China, and poor economic news in explaining changes in transparency over time.
What’s next?
Beyond this, the results of the survey are already informing our next five-year strategy at IBP. One consistent finding from the survey over time has been that governments are less likely to release information during or after budget execution, and citizens and oversight actors are also less likely to use this information. We are undertaking a multiyear initiative on budget credibility that will look more closely at what happens during budget execution, raising questions about the extent of deviations from budget, and how well governments justify these. This, we hope, will help focus attention on budget execution and encourage greater transparency during the later stages of the budget cycle.
A second area of further work is to continue to refine our understanding of how citizens use the information that is available to participate effectively in the budget process. A larger constituency of budget users is an important bulwark against regressions in transparency of the type we have seen in the Open Budget Survey 2017. It is also critical to ensure that budget allocations are aligned with public priorities, and these allocations are equitable. Public participation in budget processes will be given more attention as we collect more data through the survey on public engagement mechanisms over time, but we will also complement this with additional case studies of approaches that are working. And we will continue to build the field and help citizens to use existing mechanisms to participate. We believe that bolstering the case for participation, and helping governments and citizens to set up and use effective participation mechanisms, are part of what is needed to restore public trust in institutions and fortify democracy for another generation.
Many governments around the world are making less information available about how they raise and spend public money, according to the results of the International Budget Partnership’s Open Budget Survey 2017.
The Open Budget Survey (OBS) 2017 records the first halt in progress on global budget transparency since the survey was launched in 2006. Unlike the small but steady increases seen in past rounds, the global average score on the Open Budget Index (OBI) — the part of the survey that measures budget transparency — actually decreased from 45 to 43 between 2015 and 2017 among the 102 countries included in both rounds.
The modest decline in the global average OBI score is primarily due to changes in Sub-Saharan Africa, where the regional average score fell by 11 points between 2015 and 2017. This decline represents a significant reversal for a region that had been a major driver of the increase in the global average score the previous round. Consider these facts:
Between 2012 and 2015, of the 26 Sub-Saharan African countries included in both rounds, 12 increased their scores by more than five points, and only two countries saw their OBI scores decline by more than five points.
In contrast, between 2015 and 2017, of the 27 Sub-Saharan African countries surveyed in both rounds, only one country (Senegal) increased its OBI score by more than five points, while the scores of 15 countries in the region declined by more than five points.
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The decline in this round of the survey largely results from Sub-Saharan African countries publishing 27 fewer documents in 2017 than in 2015, a 21 percent drop. This included six fewer Executive’s Budget Proposals, a document that receives a significant weight in the OBI as it is the core document that presents and explains a government’s revenue and spending policies and its outlook for the economy. Failure to publish this key document typically results in a much lower country score.
This notable decline in the number of published budget documents in Sub-Saharan Africa can be partially attributed to an update in how IBP measures “public availability” — i.e., whether citizens have access to the comprehensive and timely information they need to participate in budget decision making and monitoring. For the OBS 2017, only those documents published on a government website in a timely manner are considered to be publicly available. Documents that are posted on the internet are significantly more accessible to the public than hard-copy documents that few may be able to obtain. Internet penetration has expanded rapidly, and civil society organizations can easily print online documents to share with others who do not have internet access. Furthermore, any document that is produced as a hard copy can now easily be posted to a website at minimal cost.
This update, however, does not account for the entire decline. Absent this change, there still would have been 10 fewer documents published in 2017 than in 2015, including four Executive’s Budget Proposals. IBP undertook various analyses to approximate the impact of this update in the OBS definition of public availability on OBI 2017 scores (see Annex B of the Open Budget Survey 2017). We concluded that even under very generous assumptions, the average score for the region would have fallen, albeit by a smaller amount.
Causes of the Decline
IBP has not yet conducted in-depth analyses to determine the factors driving this sharp drop in the average OBI score for the region. But a superficial review reveals that changes in OBI scores in Sub-Saharan Africa are not strongly correlated with changes in indices measuring democracy, income, oil dependence, or human development. These preliminary findings require further investigation.
The OBS 2017 results suggest that whatever factors contributed to improvements in transparency in the region between 2012 and 2015 were insufficient in maintaining these gains in 2017. Countries in Sub-Saharan Africa that increased their OBI score by more than five points between 2012 and 2015 declined by more on average between 2015 and 2017 than the countries that were not substantial improvers between 2012 and 2015.
While this decline in transparency could be reversed in the next round of the OBS, the Sub-Saharan African case highlights the importance of preserving gains over time. Governments should prioritize institutionalizing transparency practices through laws and regulations. Concurrently, civil society should remain vigilant in monitoring their governments to ensure they do not waver in commitments to more transparent and accountable budget systems, and by continuing to advocate for transparency and participation in budgeting and engaging in budget debates.
Many governments around the world are making less information available about how they raise and spend public money, according to the results of the International Budget Partnership’s Open Budget Survey 2017.
The Open Budget Survey (OBS) 2017 showed a drop in global budget transparency for the first time since the survey began measuring public access to budget information in 2006 – but there were some success stories among the 115 countries in the 2017 survey. Few countries have steadily sustained strong increases to budget transparency as the Dominican Republic. The country’s score on the Open Budget Index (OBI, a comparative measure of budget transparency calculated from a subset of OBS questions on the amount and timeliness of budget information that governments surveyed make available to the public) has risen 37 points since 2012, thereby making it one of the top five scores in the Latin American region in 2017, after Mexico, Brazil, and Peru. The Dominican Republic’s OBI 2017 score of 66 out of a possible 100 on budget transparency is substantially higher than the global average score of 42. But while these gains are impressive, more work is necessary to ensure they translate into meaningful public participation.
The positive measures taken by the Dominican Republic mainly relate to a restructuring of the budget office (Dirección General de Presupuesto – DIGEPRES) alongside a new approach to interacting with citizens. The creation of two units in 2012 – the Economic Studies and Budget Integration Unit and the Evaluation and Public Expenditure Quality Unit (Dirección de Estudios Económicos e Integración Presupuestaria and Dirección de Evaluación y Calidad del Gasto Público) — has been central to the improvements in budget transparency. These new units have led the reform efforts including those to increase the level of detail in budget data and improve the budget office website. The budget office has also taken steps to strengthen its processes, including hiring new professionals training them in transparency practices. This increased capacity has been bolstered by increased monitoring of performance on openness.
Going forward, the Dominican Republic is set to increase transparency even further. A major shortfall for the country was its failure to publish a Pre-Budget Statement, which the government had actually produced for its internal use. However, after the OBS 2017 research period concluded, a change in practice ensured the Pre-Budget Statement for fiscal year 2018 was published in a timely manner. This step could place Dominican Republic among the best performers in the next Open Budget Index.
While the Dominican Republic has made impressive improvements in transparency – with a clear opportunity for further improvements – and has set an example in Latin America; the government hasn’t complemented greater public access to budget information with adequate opportunities for the public to participate in budget decision making and oversight. In order to close this gap in public accountability the government now needs to match the progress in budget transparency with robust public engagement in the budget process.
Though the Dominican Republic’s score on public participation of 17 is higher than the global average, it leaves significant room for improvement. And improvement in this area has happened before. In 2014 the Dominican Republic produced and published their first Citizens Budget, a document designed to present key public finance information to a general audience. The process of producing the document was carried out in close collaboration with civil society, critical in ensuring that the document includes budget information that is accessible and useful. The government of the Dominican Republic also worked closely with IBP to learn international standards of budget transparency and accountability, and to participate in an exchange of ideas between the Dirección General de Presupuesto and different civil society organizations. Due to these efforts, the government has successfully produced more citizen-friendly budget documents aimed at different groups of people.
Though this participatory effort to increase access to information is positive, there needs to be more of a focus on establishing mechanisms that would allow the public to engage more directly in the formulation and implementation stages of the budget processes.
For example, though the government’s DIGEPRES and Portal de Transparencia Fiscal websites provide detailed budget information they lack a platform through which citizens can effectively contribute to budget policies. With regard to the enactment process, the National Congress holds public hearings during the formulation stage of the budget, participation is by invitation only. This potentially limits the inclusion of vulnerable or marginalized groups, making a budget that responds to their needs less likely. Ordinary people must be allowed spaces in which they can express their priorities; without opportunities for active participation, budget systems may only serve the interests of powerful elites.
Overall, the Dominican Republic is showing steady progress on budget transparency, which in itself is to be applauded. But we know that transparency alone is insufficient in improving governance. Efforts to improve transparency must be accompanied by improvements to opportunities for public participation. These two elements, alongside adequate formal budget oversight, must be advanced and resourced equally to achieve a truly democratic budget process.
Many governments around the world are making less information available about how they raise and spend public money, according to the results of the International Budget Partnership’s Open Budget Survey 2017.
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Posts are the responsibility of their authors and do not necessarily represent the views of the International Budget Partnership, our donors, or partners.
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.
