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April 06, 2011

Still Mostly Closed, but There’s Hope: Results from the Open Budget Survey 2010

Posted by Paolo de Renzio, International Budget Partnership

Transparency in public budgeting has been recognized as a principle of sound governance for a long time. But the systematic assessment and measurement of governments’ budget transparency is a recent phenomenon. One tool that has been developed for that purpose is the Open Budget Index (OBI), produced every two years since 2006 by the International Budget Partnership as part of its Open Budget Survey, to document the state of budget transparency across the world.

The OBI is based on an extensive questionnaire that draws on standards developed by a number of international organizations, including the IMF, the OECD, and the International Organization of Supreme Audit Institutions (INTOSAI). It ranks countries based on their scores on the OBI, which can range from 0 to 100, looking at the public availability, timeliness, and comprehensiveness of eight key budget documents that every country should publish.

The Survey is completed by an independent organization with no affiliation to government in each country covered by the Survey, and subsequently reviewed by two other independent sources in the country. Survey results are also shared with governments; for the 2010 Survey, 45 governments commented on the draft results of their respective assessments. The comments made by the Survey researchers, two peer reviewers, and governments (where available) are all included in the published version of the questionnaire that is available on the IBP website.

Data from the 94 countries included in the 2010 survey reveal that the state of budget transparency around the world is poor. The average score for the OBI 2010 is a mere 42 out of a possible 100. This means that, on average, countries surveyed provide limited information on their central government’s budget and financial activities.  Only 20 of the 94 countries surveyed had OBI scores above 60 and can be characterized as providing their citizens with enough budget data to enable them to develop a comprehensive analysis and understanding of their national budgets. These include developed countries, such as the United Kingdom, Norway, and Sweden; transitional economies, such as Brazil; and developing economies, such as Sri Lanka and Peru. Interestingly enough, South Africa tops the ranking, with a score of 92 and the publication of all eight key budget documents.

Countries in the bottom ranks (those with scores between 0 and 40) do not publish most of the eight key budget documents and provide very limited information in those that they do publish. They also share a number of common characteristics, such as low levels of income, more authoritarian political regimes, geographical location in Africa and the Middle East, and dependence on revenues from foreign aid and the sale of hydrocarbons. Finally, they tend to have weaker oversight institutions, including legislatures and supreme audit institutions, compounding the problems associated with closed budget systems and processes.

These findings seem to point to the existence of a “transparency trap”, whereby countries with certain characteristics are likely to have low levels of budget transparency, and weak demand for improvements in budget transparency by oversight institutions. However, data from the survey dispel such a view. First of all, none of the country characteristics cited above can be interpreted as binding constraints to countries achieving relatively high levels of budget transparency. Low-income, aid-dependent African countries such as Uganda and Ghana perform considerably better than their peers on the Open Budget Index. The same is true for Egypt and Jordan among Middle Eastern autocracies, and for Colombia and Mexico among resource-rich countries.

More importantly, the comparison between 2010 scores and scores from the earlier rounds of the OBI reveals an interesting positive trend. The average score for 40 countries for which comparable data is available across the three surveys increased from 47 in 2006 to 56 in 2010. Countries like Angola, Afghanistan, Liberia, and Rwanda, which all scored poorly in previous surveys, have shown significant improvements. Mongolia, Malawi, Yemen, and the Democratic Republic of Congo also started publishing previously unavailable budget documents, partly in response to their low rankings in the earlier rounds of the Open Budget Index.

A preliminary assessment of these positive changes in government practices suggests that a range of factors can lead to improvements in budget transparency. These include:

  • Changes in government: In a number of countries, improvements occurred after elections that resulted in a new government being formed, or in the appointment of a new official committed to greater transparency. For example, in Ukraine a new finance minister established a policy to require that more documents be published in order to improve discipline in the ministry, while in Azerbaijan a new head of the audit institutions started making national audit reports public.
  • Domestic pressure: Budget transparency has also increased due to pressure from various stakeholders within the country, such as legislatures and civil society groups. For example, in Liberia legislators have been supporting demands for greater transparency, while civil society groups in Brazil, Mexico, and Egypt collaborated with their governments to produce Citizens Budgets, which the governments then started publishing.
  • External pressure: In some cases, improvements in budget transparency have resulted from pressure exerted by donor agencies, and from specific initiatives like the Heavily Indebted Poor Countries Initiative. For example, in Angola and Mongolia pressure from international institutions and donors appears to have resulted in the governments making more and better budget information publicly available.
  • Technical assistance: Targeted technical assistance has facilitated budget transparency improvements in countries that were willing to make more information public as part of wider reforms in budget systems. For example, experts from international development agencies were able to support measures to enhance budget transparency in the context of public finance management reforms in Afghanistan, Nicaragua, and Rwanda.  

The IBP has commissioned further research to get a deeper understanding of some of the factors that affect budget transparency levels across countries, and changes in those levels over time. As the Open Budget Survey enters its fourth round, some additional issues are being considered, such as how to go beyond a narrow focus on the provision of budget information to cover the issue of public engagement and participation in the budget process, and how to include additional aspects of budget transparency for countries that already score well on the Open Budget Index.

Note:

The Open Budget Survey 2010 is published on the IBP website. In addition to the 2010 Survey report, the website contains numerous other resources.

These include:

  • completed questionnaires and country summary reports for all 94 countries;
  • data tables with analysis of the Survey results;
  • guide to the questionnaire;
  • an Excel database of answers to the Survey;
  • OBI rankings for all 94 countries;
  • a press release on the Survey results;
  • a report on the methodology used to complete the Survey; and
  • a list of the researchers for each of the 94 countries.

The IBP has also begun a pilot program to directly support some governments improve transparency on some aspects of their budgets.  

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.

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