Holding governments accountable

The Open Budget Index (OBI) for the year 2010 assessed 94 countries from around the world in terms of their budget openness and accountability. The drive was coordinated by the International Budget Partnership, a Washington DC based independent think-tank.

Of the 94 countries reviewed, only 24 yielded satisfactory results when it came to maintaining a transparency in their budgets. Despite some notable improvements, many of the countries surveyed have numerous milestones to achieve. The situation in Southeast Asia is even more worrying as none of the seven countries surveyed achieved a satisfactory score (i.e. at least 60 out of a possible 100 points). Singapore was, however, not included in the recent survey.

The importance of budget transparency for democratic, economic and social development

Transparency is a central theme of the good governance discourse. For economic and social development, in particular in a transitional/developing region like Southeast Asia, access to and information about budgets can make a real difference to citizens’ lives.

There are several reasons that make budget transparency relevant
1. Openness enables accountability of the government and is, therefore, a cornerstone of the democratic process;
2. The knowledge and analysis of revenues and expenditures can improve effectiveness and the quality of expenses;
3. Only open budgets allow ultimate trust in government policies. This, in turn, empowers citizens to participate in decisions taken by governments, thereby enhancing the credibility of public policies;
4. Transparency is key to prevent corruption and wasteful spending. Openness to government policies is bound to attract investments. Borrowing and lending costs would be considerably lowered if open information is provided to investors; and
5. Finally, budget transparency is imperative for advanced monitoring of the expenditure of public funds. This will facilitate processes such as fair use of revenues from natural resources or donor aid.

What does the index measure?
Keeping in mind the above parameters of budget transparency, the OBI developed a scorecard for the level of budget transparency of each country. The evaluation process consisted of independent researchers, in the respective countries, answering 123 survey questions. The focal point of transparency was determined predominantly on the publication and openness of the budget proposal of the government. The budget proposal accounted for about half of the score required to adjudicate the level of transparency of a country’s overall budget.
Once the questions were answered by different country analysts, the answers were reviewed by external reviewers to ensure consistency across the board. Thereafter, the results were sent to various government officials and anonymous reviewers for comments and feedback. Finally, the International Budget Partnership accumulated and published the results. This process is repeated every two years.

The importance of the OBI attaching a numerical value to the budget transparency of the countries surveyed is that it is of empirical value to researchers and it helps to stimulate debates between countries, analysts and observers. Not only does the overall score help compare countries on crucial performing indices such as the state of development, resource dependency and legal systems to explain the numerous variations of openness, in fact the OBI endeavors to create an improved understanding of why and where transparency matters and how it could be used as an advocacy tool to improve the lives of citizens.

Findings of the Open Budget Index 2010

The scores in the OBI 2010 range from an almost near ‘ideal budget transparency’ in South Africa and New Zealand to a total lack thereof in Iraq, Fiji and Chad. What is interesting to note is that budget transparency is not necessarily linked to the state of development of a country. While South Africa is the top scorer, developed countries like Italy and Portugal fall in the upper middle-field of the index. One can also easily identify signs of resource curse, i.e. countries dependent on revenues from hydrocarbons, and which are not democratic, are ranked very poorly in terms of budget transparency. The fact that Mongolia and Liberia have made impressive advances in budget transparency while that in Fiji has decreased depicts that development is indeed in the hands of governments. In that context, quite often progress can be achieved by simply publishing documents that would have traditionally remained only for internal use.

More information about the OBI 2010 and its results can be found on www.openbudgetindex.org. The authors are currently working on a scoring for Singapore and are available for advice on the general findings of the OBI and its results for Southeast Asia.

This article was published in ‘global-is-asian’, issue 09, Jan-Mar 2011. It can be accessed online here (pages 16/17) and was co-authored with Ora-orn Poocharoen. Both of us have worked as reviewers in the OBI process.

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