Written by 4:29 pm Verité in the News Views: 1

Transparency and the Budget

Transparency is a daily battle in Sri Lanka, but it is often hijacked or replaced by political rhetoric. What are often obscured in the war of words are important functions by the Government such as formulation of the Budget, which is seen to be so complicated and mundane that the public mostly give it cursory scrutiny but deserves much greater attention.

The global release of the latest Open Budget Survey, which was released worldwide this week, scores 115 countries on the openness of their budget process. The survey is conducted every two years. The recent assessments of the 2013/14 and 2016/17 budget processes have placed Sri Lanka 60th in the world and amongst the lowest ranked countries in South Asia and below the global average.

In the latest survey of the 2016/17 budget process, Sri Lanka scored 44 out of 100, coming in next to last in South Asia, tied with Pakistan. Even Afghanistan performed better than Sri Lanka, but Bangladesh remained behind. In the latest assessment, compared to the previous iteration, Sri Lanka improved in the information provided each quarter, on revenue, expenditure and debt. But this is clearly insufficient.

Yet the quality and timeliness of this information continued to fall short of many of its peers, believes think-tank Verite Research which launched the report in Sri Lanka. The Open Budget Survey evaluates countries on three elements. It looks at the disclosure of Budget documents, Budget oversight and public participation in the Budget formulations and amendments to the Budget.

Budget oversight at Parliament level is considered to be weak because Parliament does not play a role in the formulation of the Budget. Similarly Sri Lanka does not publish a simplified ‘Citizens Budget’ that enables members of the public to understand policies within the Budget and track what is implemented and what gets left out.

Another issue is that even though Sri Lanka has a Fiscal Management Responsibility Act, details are released in convoluted formats that are impossible to compare and understand by the average person. The Government also retains significant discretionary power in allocating funds, especially for development activities under the National Budget Department and the public have little say in how the money gets spent.

The draft estimates are difficult to comprehend, spanning three volumes of about 500 pages each; and the Budget speech focuses mainly on new expenditure proposals that cover less than 10% of the budgeted expenditure, leaving the rest opaque. So even though blanket coverage is given of Budget proposals, systematic tracking of policies and linking them back to Budget proposals is almost non-existent.

Verite argued that the Fiscal Responsibility Management Act in itself does not go far enough to meet international standards. The Act requires the Government to publish a mid-year fiscal position report that covers the first four months of the year, and a second report that covers up to eight months of the year. But there is no report that covers the full year in the same format. This undermines comparability and scrutiny of the Budget information. The Act neither requires periodic updates of the budget nor audit reports, which are integral to meeting international standards.

The greatest danger in all this is that public interest is often left out of policymaking, leaving critical issues unaddressed and a nation cannot grow if all people are not given a slice of the development pie.

Taken from DailyFT

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Last modified: November 26, 2023