Four civil society responses to South Africa’s 2012 budget

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The Centre for Economic Governance and AIDS in Africa (CEGAA) points out that the overall share of health spending allocated to fighting HIV/AIDS is growing steadily. They ask therefore that the government should assess whether HIV and AIDS is crowding out other health expenditures, as this may affect the overall mobilisation and utilisation of funding for health in general. Click here to read their analysis of this issue.

In its response to budget 2012, Idasa argues that the government is banking on a global recovery and stronger growth in the medium term. They suggest that should South Africa not get the growth which this budget assumes, and if tax revenue recovery remains poor,South Africa will face a set of difficult choices in the next few years. Click here to read their response to the budget.

The Civil Society call for Budget Justice makes a case for a more progressive tax regime and greater government spending on public services, basic needs, public sector jobs, and climate change. Click here to read the rest of the call.

The International Budget Partnership comments on recent trends in government budget transparency. They argue that government could be rewarded with improved credit ratings, greater electoral support and improved service delivery  if it supplemented its macro level budget transparency with a greater responsiveness to specific requests for information. Click here to read more.

Postscript: After publishing this post, Derek Luyt at the Public Service Accountability Monitor pointed out to me that Sangonet actually published budget comments from 22 CSOs! Click here to see them all.

Improving Governance Through Budget Transparency

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by Michael Lipsky, a former professor of political science at M.I.T., is a distinguished senior fellow at Demos, the American think tank based in New York. Lipsky is also a member of the IBP Strategic advisory Council.

A secondary result of the fiscal crises now spooling out in the United States and Europe will be greater scrutiny of the efficacy of public expenditures. Nowhere is this likely to have greater impact than in foreign aid and development assistance, as countries demand greater accountability for each dollar or euro spent. At the same time, citizens in many countries receiving assistance are also pressuring their governments for accountability.

Critical to both of these developments is the focus on public budgets. Whatever elected leaders say, when the last votes are cast and counted the critical question is how governments actually manage their funds to address problems of poverty, provide essential services such as education and health care, and make public investments to secure their future. The flip side of the question is how and in whose interest countries raise funds to fulfill their commitments. Do they use revenues raised from oil, gas, mining and other natural resource extractions for high national priorities? Or are these funds siphoned off for private enrichment? Do they make prudent use of development assistance from abroad? Continue reading →

State Capitalism makes government budgets less transparent

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Last week’s Economist tries to take down ‘state capitalism’, which it describes as an economic growth model where enterprises are ‘backed by the state but behaving like a private-sector multinational.’ This ‘backing’ takes many forms, from state-owned enterprises to significant government share-holding in private firms, to aggressive industrial policy measures such as tax breaks and loan guarantees.

The Economist claims a number of weaknesses in the state capitalism model, such as slower growth and inefficient use of capital and human resources. In addition to these economic orthodoxies, this model poses another set of problems: it makes government finances less transparent. Continue reading →

The world post-Busan: what’s in it for CSOs working on aid, transparency and accountability?

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prepared by Paolo de Renzio, Senior Research Fellow at the International Budget Partnership

After a gruelling 35-hour flight, it took me a few days to recover and digest all that had happened in Busan last week, where more than 2,000 delegates gathered for the 4th High-Level Forum on Aid Effectiveness. Overall, I thought that the outcome was fairly disappointing. The outcome document, called the Busan Partnership for Effective Development Cooperation, is long on principles and short of commitments. It was endorsed by the emerging donors like Brazil, Russia, India, China on condition that it is not binding. Specific and time-bound targets for improving donor performance, such as those agreed in Paris in 2005, are absent. And all details about the new and more inclusive body expected to oversee the implementation of the document’s commitments are lacking, though a deadline of June 2012 for its establishment was set.

But not all is bleak. The document contains strong language on the need to promote democratic ownership of development policies and processes, and recognizes the vital role played by Civil Society Organizations (CSOs) in “enabling people to claim their rights, in promoting rights-based approaches, in shaping development policies and partnerships, and in overseeing their implementation”. It also retained the commitments related to improving aid transparency, including a deadline of December 2015 for implementing a common open standard for the publication of comprehensive information on aid flows. In fact, the International Aid Transparency Initiative, which was undermined by reluctant donors in the run-up to Busan, got a strong boost with the US Government joining it, alongside other large donors such as the Asian and Inter-American Development Banks. This means that more than  75% of information of total aid flows will soon be compliant with strong transparency standards. This will allow CSOs in both donor and recipient countries to track more closely how aid money is spent.

Donors also committed to using country systems as a default approach for development cooperation, something that could strongly enhance the link between aid and budget transparency, and to further untie their aid. Finally, the document talks about the importance of fiscal transparency in combating corruption, and about the need to “establish transparent public financial management and aid information management systems, and strengthen the capacities of all relevant stakeholders to make better use of this information in decision-making and to promote accountability”.

The results of the Busan HLF4 therefore create a reasonable framework to push forward issues that are of core interest to CSOs working on transparency and accountability. Yet, much remains to be done. In order to fully exploit the opportunities opened at Busan, the International Budget Partnership will work with others to:

  1. Monitor and influence negotiations on the establishment of the Global Partnership for Effective Development Cooperation, ensuring that it adequately includes and addresses transparency and accountability issues (focusing particularly on aid and budget transparency, and use of country systems), with monitorable indicators and time-bound commitments.
  2. Work with the IATI Secretariat to ensure that aid information is increasingly compatible with recipient country budget systems and processes.
  3. Continue discussions on enhancing the linkages between aid and fiscal transparency with the smaller set of actors who were part of the Transparency Building Block at Busan, and who are committed to further and faster progress in this area.

If you are interested in joining, let us know!

How we will promote aid and budget transparency in Busan

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prepared by Paolo de Renzio, Senior Research Fellow at the International Budget Partnership

Open Budget Surveys have repeatedly found that countries that are heavily dependent on foreign aid to finance their budgets tend to have less transparent budget processes, . This might be due to various country characteristics, such as low incomes or weak democratic institutions. But donor behaviour also plays a part, as argued in a recent IBP Briefing Note. The brief highlights the importance of the relationship between donors’ provision of information on aid flows and recipient country governments’ disclosure of budget information to their citizens. In fact, aid transparency and budget transparency are inextricably linked. Budgets in partner countries cannot be made fully transparent without improved aid transparency. Only if donors provide partner countries with sufficient information, compatible with partner country budget systems and schedules, can timely, accurate and comprehensive budget information be made available to citizens of countries receiving aid. This point is also highlighted in the the Dar es Salaam Declaration on Budget Transparency, Accountability and Participation, signed last week by nearly 100 civil society groups.

At the Fourth High-Level Forum on Aid Effectiveness, which will take place in a few days in Busan, South Korea, the transparency theme will have a prominent place. The latest draft of the Busan Outcome Document (the declaration that participating governments will sign at the end of the Forum) covers transparency issues in a number of ways. First, transparency and accountability are recognized as ‘shared principles’ that form the foundation of development cooperation, alongside ownership, results and inclusive partnerships. Second, a whole paragraph (para 22) is devoted to aid transparency commitments, in which donor agencies undertake to make publicly available more information on aid flows, and to implement a common standard for its publication, building among other things on the efforts of the International Aid Transparency Initiative. Third, donors and recipient countries commit to building more transparent public financial management systems and to improving fiscal transparency.

All of these commitments were the outcome of some difficult negotiations, facing resistance from a number of donor governments, including China, Japan and France. Provided they make it through the final discussions, they are very welcome, and represent a significant step forward in recognizing the importance of transparency and accountability as key ingredients of both aid and development effectiveness. The explicit link between aid transparency and budget transparency, however, is not recognized. Luckily, this link will be the focus of a plenary session, which IBP has helped organize and which is supported by a smaller number of like-minded actors, including the governments of Sweden, the US, Rwanda and South Africa, the Collaborative Africa Budget Reform Initiative (CABRI), the World Bank and CSOs like Transparency International and Publish What You Fund. In this session, more ambitious targets and commitments around aid and budget transparency will be discussed, and hopefully agreed.

One of the most important aspects of the discussions at Busan will be to agree on the future international architecture for development cooperation, with a view to overcome the limitations of the OECD/DAC Working Party on Aid Effectiveness, which for too long has been seen as too exclusive a body that does not reflect the role of emerging donors and the need for a more equal partnership between donor and recipient governments. The current draft of the Busan Outcome Document talks about the establishment of a Global Partnership for Effective Development Cooperation. Ideally, this body should include a specific mechanism for ensuring the transparency-related commitments are monitored and enforced. Such mechanism would also gain from a multi-stakeholder nature, following the example of the Global Initiative for Fiscal Transparency (GIFT), which brings together governments, international organizations and civil society groups in a joint effort to promote fiscal transparency across the world.

The International Budget Partnership will be represented at the Busan Forum, and will report back on what happened.

Watch this space!