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8/6/2019 How a Citizens Guide Tothe Budget Can Strengthen Fiscal Transparency and Increase Public Participation May 2011
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How a Citizens Guide to the Budget
can strengthen fiscal transparency andincrease public participation
Jon Shields
International Monetary Fund
ICGFM Conference Florida May 18, 2011
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Outline
What is special about a CGB?
The context for a CGB: Fiscal transparency
Distinguishing characteristics of a CGB:
Information content
Style, format and quality
Dissemination
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What is a CGB?
About 30 countries in recent years have produced atleast one CGB, of varying contents and quality.
Typically:
Self-contained document written in clear and non-technical language.
Published by the Finance Ministry.
Produced at same time as budget is presented tolegislature.
Explains budget proposals and economic context.
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Why do governments publish CGBs?
Ensure budget message is understood; broaden
informed electorate.
Explain countries economic problems.
Enhance accountability.
Counter hostile assessments.
Increase buy-in for unpopular policies.
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What do CGBs add?
Accessibility.
Snapshot of fiscal position and
decisions.
Supplement to technical informationrequired for legislatures.
Insight into specific economic,spending or revenue decisions.
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Timing of a CGB: the annual budgetcycle
Critical point is when budget is presented to
legislature.
Allows public to participate in budget debate.
Also - follow-up if budget is greatly amended. Also - outturns should be monitored and
compared.
Other citizens guides can cover :
Pre-Budget framework
Final Budget
Outturns/end-of-year financial statements
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Context for a CGB fiscal transparency
A CGB is one instrument to help assure fiscal transparency, viz.:
Being open to the public about the structure and functionsof government, fiscal policy intentions, and public sectoraccounts and projections (Kopits and Craig).
Public right to know.
Promotes accountability; market discipline; lower corruption; goodinstitutions; time-consistent behavior and sustainablepolicy; macro and micro efficiency; trust; fairness.
Fosters better governance, internal decision-making, reform in publicfinancial management, public expenditure, taxadministration, and tax policy, macro-fiscal.
Strengthens access to international financial markets.
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IMF Code of Good Practices in Fiscal
Transparency Four Pillars
1. Clarity of roles and responsibilities: Structure andfunctions of government, responsibilities withingovernment, relations between government and the rest ofthe economy
2. Open budget processes: Budget preparation, execution,and monitoring; timetable for legislature; realism ofestimates and medium-term framework; fiscalsustainability.
3. Public availability of information: Specification of the
coverage, detail, and timing of fiscal information to beprovided to the public.
4. Assurance of integrity: Quality of fiscal data, internaloversight, and external scrutiny.
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FT Code: (1) Clarity of Roles and
Responsibilities:
1.1 Scope of government.The government sectorshould be distinguished from the rest of the publicsector and from the rest of the economy, and policyand management roles within the public sector
should be clear and publicly disclosed.
Show all ramifications of central government;QFAs, EBFs, local government relations
1.2 Framework for fiscal management.Thereshould be a clear and open legal, regulatory, andadministrative framework for fiscal management.
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FT Code: (2) Open Budget Preparation,Execution, Monitoring and Reporting
2.1 Predictable and technically sound budgetpreparation. Budget preparation should follow anestablished timetable and be guided by well-defined macroeconomic and fiscal policy objectives.
Realistic annual budget set in comprehensiveeconomic policy framework, with measuresand sensitivities assessed.
2.2 Clear procedures.There should be clearprocedures for budget execution, monitoring, andreporting.
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FT Code: (3) Public Availability ofInformation
3.1 Comprehensive information.The public should beprovided with comprehensive information on past, current,and projected fiscal activity and on major fiscal risks.
Full disclosure, as for legislature, coverage, comparability,
significance, long-term outlook.
3.2 Relevance. Fiscal information should be presented in a waythat facilitates policy analysis and promotes accountability.
Citizens Guide, minimum aggregate data requirements,
results
3.3. Timeliness. A commitment should be made to the timelypublication of fiscal information.
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FT Code: (4) Assurances ofIntegrity
4.1 Quality. Fiscal data should meetaccepted data quality standards.
4.2 Oversight. Fiscal activities should besubject to effective internal oversight andsafeguards.
4.3 Auditing. Fiscal information shouldbe externally scrutinized.
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A Citizens Guide Overall Contents
Common core of information on the
budget proposals and economic context.
Relative emphasis of the topics, and the
level of detail, should reflect country
circumstances and capacity,particularly:
pre-existing general level of understanding
level and quality of media coverage
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A Citizens Guide Why the budgetmatters
Explain role of budget in public financial
management (and requirements in constitution
or budget law).
Describe the budget process, including theroles of the executive branch, in preparing the
budget and of the legislature in authorising
government taxation, borrowing, and
expenditure.
May be supplemented by a Citizens Manual
on Budget Process.
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A Citizens Guide What the futureholds: the economic and fiscal outlook
Prospects for the economy (economic
context, resource availability)
At least for budget year
Preferably for medium-term
Medium-term projections of the fiscal
aggregates (revenues, spending, the
deficit)
Use simple tables and charts.
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A Citizens Guide How much of the
governments activities does the budget
cover? Explain different types of accounts or funds, and
what agencies are inside or outside the budget.
Include information on the governments extra-budgetary activities, and their impact on
consolidated government accounts.
Summarize and explain quasi-fiscal activities.
Show transfers between different levels of
government and any formulae used.
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A Citizens Guide What thegovernment intends to spend
Where possible:
by function (or sector),
by administrative agency,
by economic category (e.g. wages andsalaries, interest, capital expenditures).
Where applicable:
by major programme.
Provide references and links to more detailedspending information.
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A Citizens Guide Where the moneywill come from
Breakdown of the main revenue sources,
separately identifying domestic revenues (by
tax) and external grants.
Intended financing sources in the event of aprojected deficit (use of domestic assets,
domestic markets, international markets, or
concessional assistance)
Any implications for economic stability or fiscal
sustainability.
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A Citizens Guide Do the numbers addup?
Demonstrate realism of the budgeted levels ofrevenues, expenditures and the fiscal balanceby comparing with recent trends
Evaluate expected out-turn for the current year
in comparison to its forecast in the previousbudget.
List key fiscal risks:
Impacts of deviations in key economic variables fromprojections
Other specific fiscal risks (e.g. loan guarantees beingcalled)
Explain how government will meet unexpected spendingneeds
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A Citizens Guide Proposed budgetmeasures
Explain why new measures are being
introduced.
Assess expected impact of new measures onrevenues and spending, and how they will
contribute to the governments priorities.
Discuss potential impact on take-home pay fordifferent income levels, income support and
service provision.
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A Citizens Guide How the budget willhelp the government meet its objectives
Describe the governments medium-term economicand social objectives.
Identify Millennium Development Goals, whererelevant.
Explain role of fiscal policy strategy and anynumerical targets.
Show contribution of budget to fiscal strategy andbroader objectives.
Explore sustainability of the public finances andpublic debt.
Describe service delivery objectives and social impactsof spending programmes, including availableinformation on performance and evaluations.
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Suggested chapter outline of a citizens
guide to the budget
Introduction: Place of the annual budget in public financelegislation; description of the coverage of the budget and the budgetprocess, including opportunities for public participation.
The Economic Outlook and Government Objectives:Macroeconomic forecasts, assumptions and sensitivity analysis;national development strategy; medium-term fiscal policy objectives.
The Governments Accounts and Budget Prospects: Aggregaterevenues, expenditures, and the fiscal balance over medium-term;broad allocation of spending and sources of revenue, comparativefigures for previous year; public debt, fiscal risks, and thesustainability of current policies and trends.
New Measures: Summary of the main budget initiatives; estimates
of their fiscal effect and impacts on key policy groups; contributionsto meeting the governments stated policy objectives.
Improving Delivery of Services: A brief indication of what thegovernment is doing to improve service delivery
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A Citizens Guide Style and Format
Stand-alone document
Ideally, produced by Ministry of Finance
Treat as technical document - avoid politicaloverlay
More than a budget speech
More than an executive summary
Limit jargon
Use laymans terms
Highlight simple and attractive charts anddiagrams
Keep short but provide lots of links
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A Citizens Guide Content and Quality
Focus on substantive budget issues.
Avoid extraneous or irrelevant material.
Only include data that is accurate, reliable and
credible.
Explain uncertainties.
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A Citizens Guide Dissemination
Actively disseminate - arrange launches,seek NGO participation, publicize availability,generate media events, go to villages.
Make available in hard copy and electronicform.
Produce in alternative formats:
Video clips
Radio podcasts,
Posters
Pamphlets
Use multiple languages where relevant.
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Thank you
Main reference:
Producing a Citizens Guide to the Budget: Why, What and How
by
Murray Petrie and Jon Shields
OECD Journal on Budgeting, Volume 2010/2