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Stretching the Frontiers on Fiscal Openness Initiatives

Massimo Mastruzzi's picture

The recent Open Government Partnership (OGP) regional events in  Bali and Dublin have provided a fertile opportunity for participating countries to showcase their performance in advancing open data reforms and for newer members to learn from their peers. The positive energy and participation at these events was a reminder of the strides achieved in recognizing the importance of open data as a precondition for better development outcomes. This was particularly relevant in the field of fiscal openness where an increasing number of countries demonstrated how they are taking actions towards improving transparency in financial matters.

The fiscal openness working group (FOWG) - a partnership between the Global Initiative on Fiscal Transparency (GIFT), the OGP Secretariat and the Governments of Brazil and Philippines - – provided a good opportunity to review the results achieved so far. It produced a background paper that reviewed the status of fiscal commitments. The following highlights stood out in helping us gauge the extent to which fiscal transparency principles are being operationalized in the OGP context:

Strong buy-in for need to reform fiscal transparency - A third of all commitments in 41 countries were related to fiscal transparency - led by Mexico and Croatia - thus providing further evidence for the importance of global budget transparency. These included cutting edge practices and innovations such as establishment of multi-stakeholder consultation arrangements (Mexico and Peru), institutionalization of social audits (Philippines) and innovative outreach activities to promote citizen awareness of OGP (Kenya and Tanzania).

Wide variation among action plans – The stocktaking exercise revealed substantial differences in terms of scope and ambition of action plans, as well as differing degrees of institutional ownership, public participation, measurability, innovation, and implementation rates. For instance, only 20% of total provisions were classified as “starred commitments,” with the potential of bringing the greatest transformational possibilities. Similarly, public participation processes seemed weak in many places, but with Mexico standing out as a leading innovator in consultation practices and accountability arrangements. Last but not least, implementation rates varied considerably with roughly 25% fully completed and about 50% of total commitments related to fiscal transparency still lagging.

The largest question moving forward is how to best capitalize on the goodwill generated by global partnerships such as the OGP to push the frontiers on fiscal openness, gradually adding more nuanced approaches to further elevate global standards. In this respect, three critical aspects come to mind:

  • Data quality – through the work pioneered by the Bank with its BOOST program in improving accessibility and use of budget data, the issue of ‘data quality’ has gained prominence and visibility in the international community. The work carried out in more than 50 countries highlighted a variety of data integrity red flags ranging from issues of comprehensiveness and granularity to more troubling findings questioning the reliability of fiscal statistics collected and reported through central financial information systems. Given the impact that reliable data has on further use and impact, the issue of data integrity should become a cornerstone of fiscal openness initiatives, and the development community should figure out how data quality considerations should be steadily introduced in global conversations around fiscal norms and to inform future OGP action plans.
  • Address the “fiscal black holes” –Generally, OGP plans place much more emphasis on expenditures than on revenue and even less on debt stocks. Further, a whole range of extra budgetary activities – which I would label “fiscal black holes” - receive far less attention despite the fact that they can have a substantial impact on a country’s macroeconomic stability and in enhancing the fiscal space to frontload growth enhancing investments. The issue of tax expenditure for instance is only addressed in a handful of action plans (e.g Bulgaria) despite the fact these types of expenditures can erode as much as 50% of budget resources on an annual basis, are subject to much less scrutiny, and are typically regressive in nature. Similarly, issues of quasi fiscal activities, non-financial assets and contingent liabilities virtually got no coverage at all. All of the above represent areas where civil society organizations could potentially play a vital advocacy role, raising the question whether there is scope for GIFT and other initiatives to promote awareness about these neglected areas so they get featured more prominently in global conversations.
  • Usability – Too often, fiscal openness initiatives are focused on simply making information public without any real consideration of what kind of data would be relevant for potential users. We need to develop better tools to enhance our understanding of the current uses of budget work around the world as well as perceived barriers in terms of data access for further engagement. Capturing this knowledge is an essential precondition towards maximizing the usefulness of fiscal openness initiatives. It is only by matching data availability with user demand that the rubber meets the road in open budgeting.
 Photograph by Arne Hoel via World Bank Photo Collection, available here.

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