PFM blog

CABRI’s recent work on budget and aid transparency

31 January 2012
Recent Work Transparency

In the follow-up of CABRI’s participation at the 4 th High Level Forum on Aid Effectiveness, which took place in Busan last year, CABRI has pursued its work on budget and aid transparency. On the 24 th and 25 th January, CABRI took part in a conference organised by the International Budget Partnership (IBP) on fiscal transparency and public participation. The meeting, which took place in Dakar, brought together representatives from civil society and representatives from Ministries of Finance and Economics from Niger, Cameroon, Mali, Senegal, and DRC, as well as representatives from international organisations.

The focus on these particular countries was motivated by the IBP’s observation that this region had performed relatively disappointingly in the 2010 Open Budget Index (OBI). The OBI ranks countries with respect to their practices in terms of budgetary transparency and public participation based on international best practice. Best practice in this field has emerged as the production and publication of eight key budget documents:

1. The pre-budget statement, which should be published at least a month before the budget proposal;
2. The executive’s budget proposal, which should be published three months before the start of the fiscal year;
3. The citizen’s budget, which should be published at the same time as the budget proposal;
4. The enacted budget, which should be published no later than three months after the parliament has voted;
5. In-year reports, which should be published a month after the reporting period;
6. The mid-year review, which should be published during the six weeks after the reporting period;
7. The year-end report, which should be published six months after the end of the exercise;
8. And the audit report, which should be published no later than two years after the exercise.

In terms of these publications, the OBI gives importance to the comprehensiveness, reliability and completeness of the content of these documents, as well as the timeliness under which they are published. The survey also takes into account the extent to which these documents are made accessible to the public and the extent of public participation in the various phases (planning, approval, execution and evaluation) of the budgetary process.

Within the given region, Mali was the best performer in 2010, scoring 33% on the OBI, while the rest of the pack scored poorly, between 2% and 6%. Based on this observation, the dialogue between civil society and government representatives sought to establish an assessment and ensuing recommendations to improve fiscal transparency and public participation in their respective countries.

The dialogue was also an opportunity for these countries to recall why fiscal transparency and public participation are important and the benefits which they generate. The senior budget official from DRC identified that the main goal of fiscal transparency and public participation was to serve the population.

The representative from Niger made the essential point that fiscal transparency and public participation contribute to a democratization process, which leads to citizens becoming more equal faced with the budget. Fiscal transparency and public participation also create a virtuous circle, which can participate to a more optimal use of public resources and hence better service delivery, greater economic efficiency and more growth. Meanwhile, the Malian delegate indicated that having involved, engaged and active citizens could help the government to improve its methods, documents and practices, establishing a culture of learning.

Other benefits which were identified were that fiscal transparency and public participation can:

  • Limit the extent of corruption and misuse of funds;
  • Generate a better coordination between donors;
  • Enable a better acceptability of fiscal measures by the public;
  • Develop an image of good governance in the country;
  • And strengthen overall public financial governance.

By bringing these actors together and through country break-out sessions, observations emerged with respect to the status and scope for progress regarding fiscal transparency and public participation in the region.

Improvements since 2010

Participants shared their experiences with respect to the progress made in the planning phase of the budgetary process since the last OBI results. For example, Mali established an internal control system and started publishing quarterly budget reviews. DRC has made many of its publications available on its website and government procurement laws have been reformed. Senegal has added many annexes to the budget proposal, such as those relating to risk assessment, information systems have been established and a good governance programme has been put in place. Meanwhile, although progress has been made in the execution and approval phases of the budgetary process, progress has been less wide-ranging than that in the first phases of the cycle.

Easy wins

Encouragingly, it came to light that the OBI scores in the region could easily be improved. As such, many budget documents are already produced by the Ministries of Finance and Economics, but not published. Most importantly, one of the key documents, the budget proposal, represents a vital step in improving fiscal transparency and is not being published in many countries of the region. In the OBI questionnaire, the budget proposal represents more than 55 questions out of a total of 92 questions, reflecting the importance of this document. Other in-year reports are also already being produced and could easily be made accessible through internet. The discussion did raise the issue though that internet may not be sufficient to increase transparency and public participation, as in most countries, internet access remains limited. Furthermore, OBI scores were brought down by documents being published outside of the delays recommended by best practice. Correcting this may mean clarifying the budget calendar, which may not require such an additional effort as changing the format and content of a document.

Few frameworks for public participation

While civil society representatives acknowledged that there is scope in the current state for some sort of participation in the budget process, the latter is not collaborative, due to asymmetry of information, for example, which biases the dialogue between civil society and ministries. The civil society representative from Cameroon indicated that the budget calendar was not always published. In Mali, while civil society was able to make recommendations and observations to the pre-budget statement, these were not always sufficiently taken into account in the final budget proposal. It was also noted that division of civil society weakened its power to participate and hence civil society needed to organise itself more efficiently in its lobbying and participative efforts. This challenge was due to the fact that, unlike with respect to fiscal transparency, there is no such thing, as yet, as a best practice in terms of public participation. This is because public participation in the budget process is more complex and country-specific, than the production and publication of key budget documentation.

Weakness of the legislature and media

In many of these countries, the media remains weak and not sufficiently empowered to spread information and raise the debate within the population. The civil society representative from Niger went so far to say that, in his country, disinformation was taking place by the media. What’s more, it was noted that the legislative power was not sufficiently strong. Meanwhile, some representatives of civil society noted that even if appropriate involvement of the legislative branch was achieved, the parliament in certain countries sometimes failed to represent the interests of the people. In this context, it was also raised that political opposition should play an important role in the budget process and should effectively participate in the budget debate.

Institutional and capacity constraints

Another key point of discussion was the extent to which institutional and capacity constraints mean that progress is difficult to achieve in certain sectors. For example, in Mali there are constitutional constraints, which mean that the audit institution is part of the Supreme Court, which means that the government is finding it challenging to make the audit institution independent. This, in turn, means that the audit institution remains understaffed to fulfill its duties and produce the audit report. This is also causing delays in the external audits report, the last one having been published in 2008. A system of internal audit is still absent, partly due to the lack of an audit culture and capacity constraints in terms of human resources. What’s more, internal controllers in Mali are appointed by the President, which limits the independence of the control system. Meanwhile, another element which creates a so-called “transparency leak” is the inefficient control and accountability of agencies and para-public institutions.

Aid Transparency and Management

Finally, another key element, which arose from the discussion, was the fact that aid flows are not sufficiently transparent, raising the importance of aid transparency to achieve fiscal transparency. This brings us to CABRI’s participation, from the 24th to the 26th January, in the Aid Management Platform Workshop, organised by Development Gateway, also in Dakar. CABRI brought a budget perspective for aid coordinators present at the conference, by emphasizing the need for them to bring the aid information that they hold on budget. The session served as a reminder that having aid off-budget causes the following problems:

  • A duplication of funding for the same services;
  • A disruption of services;
  • Funding for activities is rejected by the budget system;
  • Funding of activities is not aligned with country priorities;
  • Forward cost of aid activities;
  • A transparency cost;
  • A fungibility of resources, double dipping and internal accountability;
  • A weak external accountability of the executive to parliament and public.

The lack of aid transparency is created by several factors, such as donor systems not being set up to provide information, information by donors being incomplete and provided too late, international information being incompatible, and line ministries not willing to share information. Notwithstanding these factors, it is vital to create an interface between the aid management process and the budget management process, in order to report and import aid information in the budget process and cycle. 

Sign up to the CABRI Newsletter