A global X ray of the world’s budget processes shows progress has gone into reverse

February 14, 2018

     By Duncan Green     

I dropped in on the London launch of the Open Budget Survey 2017 last week – I’ve been helping its creator, the International Budget Partnership, update its strategy. The survey has been running since 2006 – this is its sixth round. It now covers 115 countries, covering 93% of the world’s population, and assesses governments on their transparency, independent oversight of the budget process and public participation. Both the content and the pageantry around the launch were striking.

First the main finding: after steady improvements in previous rounds, the average score fell back for first time. There was a particularly steep reversal of previous gains in Sub-Saharan Africa, where 22 out of 27 countries had scores falling from 2015-17, 15 of them significantly so. Why? Vivek Ramkumar from IBP was disarmingly honest – ‘we frankly don’t know’. They’ve run the numbers and found no correlation with human development, oil revenue or changes in governments. Is it linked to closing civic spaces? The rising influence of China? So far, the only correlation they have found is an intriguing one – governments that had recently issued bonds on international markets were more transparent.

Warren Krafchik, IBP’s director, emailed me a few hypotheses of his own:

  • At some point, it gets harder especially politically (but also technically) for governments to produce and publish information. It seems to be somewhere between 40 and 60 out of 100 on the Survey – the point at which information about state owned enterprises, debt and borrowing, and contingent liabilities starts to count. Also, the fact that several countries produce this information but do not publish it strengthens the case about the political drivers.  It is easy politically to publish information up to 40 out of 100, then the interests of vested interests inside and outside government kick in, and can overpower government champions.
  • Several of the countries that made big leaps in transparency in the late 1990s/early 2000s to become champions, such as South Africa, India, Brazil, and Mexico were responding to regime changes, fiscal/debt crises, and the perceived need to satisfy international and local creditors, and the private sector more generally. The private sector though – and many donors (such as the World Bank) – have relatively low thresholds/demands for transparency. Policy certainty is much more important. The Bank for example only requires countries to publish their budget, which 95% of countries already do. So, pressure from these constituencies tends to decline at a relatively low level of transparency.
  • At present, the demand for open budgeting from civil society is not yet sufficient to replace these other drivers. A gap therefore emerges that allows countries to slip back without too many negative repercussions. The demand from civil society for budget data is still relatively weak, disaggregated, and fragmented. Civil society was not a strong driver of the first wave of transparency improvements – and is not yet strong enough to drive deeper transparency and participation.  I am not referring here to the lack of analytical users, but the absence of strong, broad, powerful and organized demand for transparency/participation in the budget.  It is still a niche civil society issue – and even that niche is fragmented.

Speakers in the audience also suggested declining aid dependence (Mozambique) or a shift to dependence on Chinese aid (fewer strings). Finally, someone pointed out a change in the OBS methodology, requiring countries to make key documents available on line and on time. That’s a positive change, but many African government websites are particularly clunky and moving the goalposts in this way explains about half the decline in the continent.

So much for the content, what about the pageantry? The turnout attested to the pulling power of the transparency and accountability movement: Indonesia’s finance minister on video, Georgia’s in person, along with the new DFID Minister for Africa Harriet Baldwin, and Rachel Glennerster, the new DFID chief economist, moderating.

Why were they all there? The Georgian Finance Minister was in no doubt: ‘This is part of our strategy to make Georgia a regional hub. We have no mineral resources, and we want to join the EU. Making governance more open, more business-friendly is vital.’ Which also attests to the power of league tables – Georgia has leapt from a dismal rating to 5th (just below Norway) and they are letting everyone know about it.

More generally, the OBS shows the traction that can be generated by an index based on painstaking research, with a sharp focus, which works with the grain of donors. But at this point, I must confess, I have a kind of Groucho Marx syndrome by proxy, which means I always worry about clubs that are too popular with the rich and powerful. Is this club so full because it isn’t really asking governments or powerful players to do much that would rock the boat? Who benefits from all this transparency? Investors certainly love it – a woman from Blackrock on the panel explained that it helps them assess country risk. I’ve got nothing against the right kind of foreign investment, but it seems a long way from the lives of poor communities in many countries.

Putting such qualms aside, there were some important insights for activists:

Lack and skewed timing of oversight: Over 40% of legislatures did not make a single amendment to budget submitted by executives. When they do, they tend to focus on the initial proposal, not implementation, so executives have got skilled at fiddling with the budget after it’s been approved, safe in the knowledge that no-one will spot it (the media have the same short attention span as parliamentarians on budget issues).

A Ugandan CSO rep pointed out that CSOs always demand the release of more data, but the key issue is that the way that information is presented has to be useable – eg a simplified ‘citizens’ budget’, and a predictable budget publication cycle so that CSOs can prep in advance.

Lots of governments have the rights kinds of budget documents but simply don’t make them public – there’s a quick win for activists in persuading them to simply press the button and upload them on their websites.

Finally, the next generation of transparency activism has to go local. In the slightly tongue-in-cheek words of Vivek ‘In an ideal world, citizens would be eagerly awaiting the latest budget report. That doesn’t happen; public mobilization often requires a very specific issue, often at community level – is my school/hospital working?’

And here’s the league table:

Country league table