Saturday, April 13, 2013

Performance on budget oversight, engagement poor, Open Budget Survey suggests strengthening of legislatures, Auditor General

At a time, when the Auditor General has questioned public spending that is almost equal of revenue mobilisation, another global institution has also reported that the government is not accountable for the management of public money.
"With a score of 44 out of 100, the country is only marginally higher than the average score of 43 among the 100 countries surveyed but is well below the scores of its neighbours in South Asia," said Open Budget Survey 2012 that has attributed the low score indicates to less information sharing on budget and financial activities by the government with public during the course of the budget year. "It makes challenging for citizens to hold the government accountable for its management of the public’s money," it said, adding that Nepal’s Open Budget Index, however, has remained largely constant since 2008.
The Open Budget Index is composed of sub-scores for each of the eight key budget documents — pre-budget statement, executive’s budget proposal, enacted budget, citizens budget, in-year reports, mid-year review, year-end report and audit report — assessed in the survey.
"Of the key components, Nepal must start citizens budget to engage public in the process," according to the chairman of Freedom Forum — that has helped survey in Nepal — Taranath Dahal.
The sub-scores represent the average of the scores received on a set of questions in the survey that measure the public availability of and amount of information in the documents. The sub-scores are comparable across all the countries in the survey.
The Nepal government has the potential to greatly expand budget transparency by introducing a number of short-term and medium-term measures, some of which can be achieved at almost no cost to the government, the International Budget Partnership that publishes the report has recommended, adding that Nepal can increase the comprehensiveness of the executive’s budget proposal, specifically by focusing on providing information on expenditures classified by programmes for the budget and previous year, multi-year estimates of aggregate revenue for at least two years beyond the budget year, impact of different macroeconomic forecasts and assumptions used in developing the budget and extra-budgetary funds, transfers to public corporations, quasi-fiscal activities, expenditure arrears, contingent and future liabilities, financial and non-financial assets, earmarked revenues, tax expenditures and percentage of the budget devoted to secret items.
It has also suggested to link the budget to the government’s stated policy goals and quality of non financial and performance data for expenditure programmes, apart from increase in comprehensiveness of the in-year reports by comparing actual year-to-date expenditures and revenues with either the original estimates for that period or the same period in the previous year and by providing information on actual borrowing for the budget year related to the composition of government debt.
The recommendations also include increase in the comprehensiveness of the year-end report by including explanations for the differences between estimates and actual outcomes for both expenditures and revenues, for macroeconomic variables, for nonfinancial data and performance indicators, for funds intended to directly benefit the country’s most impoverished populations and for extra-budgetary funds; and increase in comprehensiveness of the audit report by publishing reports on the audits of extra-budgetary funds and reports listing actions taken by the executive to address audit recommendations.
"Moreover, the supreme audit institution should provide the legislature with detailed audit reports on the security sector and secret programmes," it said, asking to strengthen Legislatures and Supreme Audit Institutions in budget oversight as they play a critical role in planning and overseeing the implementation of national budgets.
Similarly, the Open Budget Survey assesses whether legislatures provide effective budget oversight by measuring performance on 11 indicators, including consultations with the executive prior to the tabling in the legislature of the draft budget, research capacity, formal debate on overall budget policy, time available to discuss and approve the budget, legal authority to amend the budget proposal, approval of shifts in expenditure budget and excess revenues collected, supplemental budget powers, authority to approve use of contingency funds, and scrutiny of audit reports.
It also assesses whether supreme audit institutions are empowered to provide effective budget oversight by using the following four indicators including authority to remove the head of the supreme audit institution, legal power to audit public finances, financial resources available, and availability of skilled audit personnel.
To improve budget oversight, the International Budget Partnership has also recommended Nepal that executive must hold consultations with a range of legislators as part of its process of determining budget priorities, legislature should have a specialised budget research office to assist with budget analysis, the legislature should have unlimited authority to amend the executive’s budget proposal, it should be required to seek approval from the legislature prior to shifting funds between administrative units and between line items, prior to using excess revenues that may become available during budget execution and prior to using contingency funds, and is required to seek approval from the legislature on supplemental budgets before these funds are expended.

South Asian score
India — 68
Afghanistan — 59
Bangladesh — 58
Pakistan — 58
Sri Lanka — 46
Nepal — 44
(Source: Open Budget Survey 2012)

Nepal's score over the years
2006 — 36
2008 — 43
2010 — 45
2012 — 44
(Source: Open Budget Survey 2012)

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