Social Control and Transparency in Brazil
Posted by Helio Tollini
The requirements of the Fiscal Responsibility Law (LRF), of May 2000, helped improve transparency of the public accounts at all levels of governments in Brazil. The advances in this area were testified by the International Budget Partnership (IBP), whose 2008 Open Budget Initiative ranked Brazil 8th in terms of the budget process transparency, and by the Public Expenditure and Financial Accountability (PEFA) Initiative, whose report on Brazil, currently under finalization, places the country first among approximately 90 finalized assessments.
The LRF had never been changed until the recent approval of Complementary Law nº 131, of May 2009. The new law requires all federative units (which includes the municipalities) to make available “detailed information” on the Internet, in real time, of their budget and financial execution. According to the law, since May 28, 2010, the federal government, the states and the municipalities with more than 100,000 inhabitants are obliged to provide the required information on their own websites. The deadline is extended by one more year for municipalities whose number of inhabitants ranges from 50,000 to 100,000, while the municipalities with less than 50,000 inhabitants have three extra years to adjust, until May 2013. The law foresees sanctions for non-compliance, like the withholding of voluntary transfers from the federal government, which are very important for smaller states and municipalities.
A month and a half after the deadline, the NGO Contas Abertas (“Open Accounts”), launched the Transparency Index and ranked governments according to the transparency of their public accounts. Gil Castello Branco, General-Secretary of Contas Abertas, stresses that the legal obligation to publish information might not always results in higher transparency, since "there might be difficulties to access and understand the data provided on the websites". Therefore, the NGO’s idea is to go a step further than the new LRF requirements and assess whether the information provided allows the society to, in fact, monitor the public accounts. In August, the NGO intends to release a new Index that will include the 26 capital cities and, in October, a new release will consider the 237 cities with more than 100,000 inhabitants. From then on, Contas Abertas intends to incorporate the smaller municipalities and release a new Index every six months.
Created with the help of a committee of experts, the NGO’s index takes into account the analysis of a set of 110 items from the official websites, divided into three topics: content, usability of the portals, and updating frequency and availability of historical time series. The content is equivalent to 60 percent of the overall score. In order to obtain a good score, the website needs to present information on revenue collection, all phases of budget execution, easy access to budget classifications, personnel expenditure and public servants, and contracts and bidding processes. Usability, which corresponds to 33 percent of the overall score, means providing downloadable information with navigation ease, and allowing consultation for different periods of time and interaction with users. Updating frequency along with the availability of historical series corresponds to the other 7 percent of the overall score.
The Index shows that half of the websites maintained by the 26 Brazilian states and the Federal District scored below 5 (on a scale of zero to ten) as regards the transparency of their accounts on the Internet. The State of Sao Paulo (Southeast of Brazil) appeared first among the states, with a grade of 6.96, followed by the states of Pernambuco (Northeast) and Rio Grande do Sul (South), with grades of 6.91 and 6.29 respectively. The State of Rio de Janeiro reached only the 12th place with a score of 5.0. The federal government, included in the overall ranking, obtained the highest score among all Internet portals tested, with a score of 7.56 points.
The NGO’s intention in publishing the ranking is to stimulate a healthy competition for more transparency and to create an incentive to improve scores for those who today are poorly positioned. There is a belief that, although the Index is not a certificate of probity or good management, the ranking will be an incentive for authorities to make detailed information on their government’s public accounts available on the Internet.
The Transparency Index website also provides a written assessment (in Portuguese) on each government website, explaining the grades obtained on each one of the three evaluation topics, and emphasizing the strengths and the main issues detected (in this first assessment, most weaknesses detected had to do with difficulties to surf the websites and to capture and transfer data from them). The website also has interviews with government authorities, academics, and experts on public accounts.
Contas Abertas receives no funding from the public sector. The Transparency Index initiative has the support of civil society and professional organizations, such as the Brazilian Bar Association (OAB) and the Brazilian Enterprise Council for Sustainable Development (CEBDS).
 Among other things, Brazil’s rank in the 2008 assessment could have been further improved if IBP considered the Budget Guidelines Law (LDO) as a budget document. Every year, the LDO precedes the budget law and determines its big figures and fiscal targets, and has to be approved by the National Congress.
 The website site is also a very useful tool to access financial information on all Brazilian States in a single place.
Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.