Posted: 02 Nov 2013 03:23 AM PDT
Posted: 01 Nov 2013 11:50 PM PDT
Clarity about public spending can make poor countries richer
WHETHER you are a farmer in Mexico, a student in Nigeria or an IMF official, openness about government expenditure matters. In the run-up to this week's summit in London of the Open Government Partnership, a slow-moving international effort to promote transparency, clarity about budgets is a bit of a bright spot.
Until 2008 the Liberian government provided scant information on its spending. It now puts budget documents online, and in January erected an electronic billboard outside the Ministry of Finance in Monrovia, the capital, to provide fiscal news to passers-by. Meanwhile, Morocco and Kyrgyzstan publish their budgets on downloadable spreadsheets.
Openness need not be costly. Of the African states surveyed by the International Budget Partnership (IBP), a pressure group, 24 turned out already to produce 58 of the budgetary documents needed. But these were private—either for donors or for internal purposes. Warren Krafchik of the IBP says political will, not technical capacity, is the main brake on openness.
Once details are published, citizens can lobby for different spending priorities. BudgiT, a Nigerian group, turns the numbers into easily understood infographics. It shows that $144 billion from oil revenues could pay the university costs of 1.5m students, or provide fertiliser for 14m farmers. Fundar, a Mexican think-tank, created a website showing that richer states got the lion's share of money from the Procampo farm-subsidy programme. (Getting the data took 30 requests and 16 appeals.) After a media uproar the authorities brought in a new maximum payout for subsidies and promised to revise the list of recipients.
Openness and scrutiny encourage lenders. In a study in 2012 the IMF linked economic crises to undisclosed debts and deficits. Openness in public finances was found to be an important predictor of a country's credibility in the eyes of the market. Richard Hughes from the IMF's Fiscal Affairs Department says that clarity also makes shocks to fiscal policy less likely.
The IMF does not exactly practise what it preaches, however. In an index on aid transparency published last week, it came 28th out of 67 donor organisations for the openness of its aid programmes, with a "poor" score of 32%. (America's Millennium Challenge Corporation came top, with 89%.) Secrecy is a hard habit to ditch. But at least it is becoming more conspicuous.
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