Budget transparency and accountability

Published September 21, 2015
Finance Minister Ishaq Dar performing the balloting for the selection of cases for tax audit at the FBR office in Islamabad last week.
Finance Minister Ishaq Dar performing the balloting for the selection of cases for tax audit at the FBR office in Islamabad last week.

WITH the Sustainable Development Goals ready to be finalised this month, there is a consensus over their objectives and the enormity of the challenges facing the countries, especially the low- and middle-income ones.

One obvious challenge is the lack of adequate budgets to support the achievement of the SDGs and a strong need to ensure efficiency and transparency in the use of available resources.

One of the key weaknesses identified for the failure to achievement the Millennium Development Goals (MDGs) was the unavailability of sufficient budgetary information to monitor the needed financing to achieve the targets and to hold governments accountable for the results.

This weakness has also been reiterated in the recent Open Budget Survey 2015 report by the International Budget Partnership, which reveals large gaps in the amount of budgetary information that governments make available to the public.

Covering 102 countries, the survey is the largest comparative assessment of the three components of a well-functioning budget accountability ecosystem: transparency, public participation and oversight.

Transparency (open budget index): The survey used 109 indicators to measure budget transparency in the participating countries. These indicators refer to public availability of eight different budget documents by the central government, including the pre-budget statement, the executive’s budget proposal, the enacted budget, the citizens’ budget, in-year reports, mid-year review, year-end report and the audit report.

Pakistan ranked 60th out of 102 countries in the current survey. Meanwhile, the country’s open budget index has dropped from 58 (out of 100) in 2012 to 43 (out of 100) in 2015. A regional comparison shows that Bangladesh leads South Asia with a score of 56, followed by India (46), Afghanistan (42), Sri Lanka (39) and Nepal (24).

Pakistan’s score of 43 is lower than the global average of 45. Major hindrances in achieving a higher ranking owe to the unavailability of publically available pre-budget statements and the absence of a citizens’ budget and a mid-year review.

Public participation: Both transparency in budgets and public participation are essential for improving governance. The survey assessed the degree to which the public is engaged by the government in the budget-making processes.

Pakistan scored 10 (out of 100) in public participation, which signifies a poor state of public engagement in the budgetary process. Pakistan’s score is way lower than the global average of 25.

A regional comparison places Pakistan at the bottom of South Asia, with Afghanistan leading with a score of 27, followed by Bangladesh with 23, India and Nepal (19), and Sri Lanka (15).

Budget oversight: Legislatures and audit institutions play a vital role in ensuring transparency and effectiveness of the budgets by providing oversight during the budget-planning and implementation phases. The survey examines the extent to which a country’s legislatures and supreme audit institutions provide oversight of the budgetary processes.

Pakistan has a low score of 27 (out of 100) on budget oversight by the legislature owing to limited oversight during the planning stage of the budget cycle and a weaker oversight during its implementation. Also, the executive in Pakistan does not need prior approval by the legislature before implementing a supplemental budget.

Regarding budget oversight by the audit institutions, Pakistan ranks well with a score of 67 (out of 100), as under the law the audit institution has full discretion to undertake audits as it deems appropriate. However, the report pointed out that while the audit institution is provided with sufficient resources to fulfil its mandate, it has no quality assurance system in place.

Pakistan’s budget system lacks in transparency, public participation and oversight mechanisms. To improve budget accountability in the country, it is suggested that the government should publish a pre-budget statement, a mid-year review and a citizens’ budget document.

The government must also provide meaningful opportunities for citizens and the civil society to participate in the budget process. It should also establish credible and effective mechanisms like public hearings, surveys and focus groups in order to capture public perspectives on budgetary matters and hold legislative hearings on the budgets of specific ministries, departments and agencies at which public testimonies are also heard.

A specialised budget research office should be established for the legislature to help lawmakers in budget matters. It should also be ensured that the executive receives a prior approval by the legislature before implementing a supplementary budget.

It is time that effective mechanisms and opportunities are created to hold the government accountable for planning, managing and utilising public funds. This is only possible with meaningful opportunities for citizens and the civil society to participate in the budget process and a strong oversight by the legislature and the audit institutions.

This way not only improved and efficient resource allocation can be ensured but also a sustainable link between data, policies and budgets can be established.

The writer is a research fellow at the Institute of Social and Policy Sciences Islamabad.

abdullah_alam@yahoo.com

Published in Dawn, Business & Finance weekly, September 21st, 2015

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