Monday, 21 February 2011

SA's budget process ranked best in the world

From here.

The international Open Budget Survey for 2010 was released recently. The survey covers 94 countries and is conducted every two years.

It is the world’s only independent and comparative measure of budget transparency and uses criteria mainly developed by the IMF (International Monetary Fund), OECD (Organisation for Economic Cooperation and Development) and INTOSAI (International Organisation of Supreme Audit Institutions.

The report contains a number of key findings and recommendations, which are too numerous to repeat here. However, the following comments are worth noting:

- The average Open Budget Index (OBI) score for the countries surveyed in 2010 is 42 out of 100. SA received a score of 92

- Only 20 of the 94 countries had OBI scores above 60 and can be characterised as providing their citizens with enough budget data to enable them to develop a comprehensive analysis and understanding of their national budgets.

- About one-third of the countries (33) provide some information, scoring between 41 and 60, though this information is far less than what is required to obtain a clear understanding of the budget and to provide a check on the executive.

- In a plurality of countries (41), the amount of information provided is acutely inadequate. This includes 19 countries in which only minimal information is provided (those with scores between 21 and 40), as well as 22 countries in which little to no budget information is provided (those with scores of 20 or less).

- In 21 of the 22 countries that provide little to no budget information, the Executive’s Budget Proposal - arguably the government’s most important policy document - is not even released.

- Even when budget documents are made public, essential information is often absent. Only 17 of the countries examined, for instance, provide comprehensive budget information on policies intended to alleviate poverty. Another 41 countries provide no information on extra-budgetary funds in their Executive’s Budget Proposals even though, on average, extra-budgetary funds account for nearly 40 percent of central government expenditures in transitional and developing countries

- Countries performing poorly on the OBI tend to share certain characteristics - such as low levels of income, low levels of democracy, geographical location in Africa and the Middle East, and dependence on aid and revenues from the sale of hydrocarbons. (South Africa is a clear exception). These characteristics, however, are not necessarily deterministic of budget transparency.

- Countries that have the political will to become more transparent can make meaningful improvements relatively quickly.

"Having analysed the SA national budget each year since 1989, there is no doubt that SA’s budget process has improved dramatically over the years, especially after Trevor Manuel become Finance Minister. Minister Pravin Gordhan has improved the process. The documentation has become consistent, transparent, and rich in detail; something that was completely lacking prior to 1994.

"Unfortunately, a transparent budgeting process is a necessary but not sufficient condition for effective government. Once National Treasury has allocated the funds and set the key expenditure priorities it is up to each government department to deliver an acceptable outcome using the funds available. That is clearly not happening, especially in key areas such as education and healthcare, but also within many provinces and municipalities," says Kevin Lings, Economist at Stanlib.

I'm whistling and looking at the sky with this satisfied grin on my face.

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