Government Spending Watch – a new initiative you really need to know about

April 22, 2013

     By Duncan Green     

I’m consistently astonished by how little we know about the important stuff in development. Take the Millennium Development Goals – the basis forGSW logoinnumerable aid debates, campaigns, and negotiations. A large chunk of the MDG agenda concerns the size and quality of public spending – on health, education, water, sanitation etc. So obviously, the first thing we need is to know how much governments are spending on these things, right?

Well no actually, because we don’t have those numbers. Until now. Oxfam has teamed up with an influential and well-connected NGO, Development Finance International, which advises developing country governments around the world. Working with a network of government officials, DFI has pulled together and analysed the budgets of 52 low and middle income countries (With another 34 to follow). The result is a new database, called Government Spending Watch, (summary of overall project here) and a report ‘Progress at Risk’, previewed in Washington last Friday in a joint DFI/Oxfam America event to coincide with the IMF and World Bank Spring meetings. The full report won’t be ready ‘til May, but an initial draft exec sum is available, and here’s what it says.

The data cover seven sectors (agriculture/food, education, environment and climate change, gender, health, social protection and water/sanitation), from 2008 to 2015 (including medium-term forecasts). They examine planned and actual spending, disaggregated by types (recurrent and capital), and sources of funds (government revenue or donor funding). There are some major gaps (see map), so the first call is for donors (who are often the worst culprits) and governments to collect and publish more and better data.

The report looks separately at countries with and without IMF programmes (although attributing the differences to the IMF is tricky, and the report avoids doing so). Headline findings are:

  • Most countries have been increasing revenue and spending as a % of GDP, but this is now going into reverse
  • The sources of government finances have shifted from grants to loans, including more expensive domestic borrowing, raising fears about growing debt burdens (although no new debt crisis is imminent)
  • Countries with IMF programmes have raised less revenue, are cutting deficits faster and have seen less positive trends in MDG spending. Agriculture and health spending are now much higher as a percentage of GDP, and education and social protection spending are rising faster in non-IMF countries. Other MDG sector spending is stagnating compared with GDP or total spending.
  • For all MDGs, the vast majority of developing countries are spending much less than they have promised or than international organisations have estimated is needed. Only one third of countries are meeting any education or health goals, and less than 30 per cent are meeting agriculture and WASH goals. Trends have been even less positive for gender and sustainable development.
  • Some of the spending has been funded by rapidly growing aid – especially in education, health, WASH and agriculture. Progress in these areas is threatened as OECD aid flows are now declining in real terms, and are increasingly moving away from MDG sectors to infrastructure and growth.
  • In most countries, actual spending is substantially less than the amounts announced in budgets (see table). This is particularly true in the health, agriculture and WASH sectors, reflecting delays in donor funding, and absorptive capacity problems in sector ministries and decentralised government agencies.
  • Types of spending show two worrying patterns. Some sectors (WASH and agriculture) are dominated by investment, raising the need to increase recurrent spending dramatically to maintain buildings and equipment. Others (education, health and social protection) are dominated by recurrent spending on wages and supplies. Especially if donors reduce budget support, which funds much recurrent spending in many countries, governments will need to make even greater revenue efforts to maintain recurrent spending and keep delivering progress.

GSW MDG table

If the excitement around last week’s prelaunch is anything to go by, this is going to be a really important initiative. According to report author and DFI boss Matthew Martin:

“We had conversations with officials from about 20 IDA countries about their relative performance in terms of spending and transparency and all of them were anxious to see the full data and report, and to improve their performance. Senior donor government officials were also energised about being able to use these data to see country spending inputs for the MDGs and for the post-2015 framework.

Major global campaigns on education and health were anxious to see and use the data. The DC development research community (Brookings, CGD, IMF, World Bank) as well as USAID, MCC and the African Development Bank  were very excited by the data and want to organise further seminars after the full report is published and consider using the data for their own research and policymaking.

We also had great conversations about potential partnerships with the International Budget Partnership (who run analysis and campaigns on budget transparency and accountability), and the BOOST team in the World Bank (who help countries produce much more detailed geocoded data and would like to code it for the MDGs).

All in all, an amazing week: it has felt like standing on a snowball which is rolling faster and getting bigger every day – we start again with the New York academic and UN community next (i.e. this) week.”

Looking ahead, citizens and social movements in poor countries will now be able both to see what their governments are promising and delivering, and to compare that with other countries in the neighbourhood. International bodies will be able to track the extent to which warm words translate into cash on the ministerial table. Internationally, Oxfam will certainly be using the database as a vital new tool to help local citizens and civil society actors ensure their governments actually deliver the goods.

In addition to scaled up advocacy and campaigns, the plan now is for GSW to expand the database to cover more countries and years, and to publish regular updates. But to do that we will need to find funders and advocacy partners. Please form an orderly queue……