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Part II.   First Principles

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4. BUDGET BASICS

"Budgets and budget policies are put together on an ongoing basis. So one of the interesting things about budgets is that they keep coming, the process never ends." -Vinod Vyasulu, Centre for Budget and Policy Studies, Bangalore, India, at the IBP's second conference

This chapter includes a basic introduction and discussion of different issues related to public budgeting. Specifically, it:

• Outlines the generic stages of the budget cycle, with a short discussion of potential civil society actions at each stage;

• Summarizes some central problems of budgets in developing and transition countries; and

• Describes some of the key principles that are essential to an effective budget system, such as the importance of transparency and checks and balances.

For further information about basic budget issues, please see the references in Chapter 10 of this guide, including a list of several key international documents that describe the budget process and budget issues in great detail. Appendix III provides a glossary of key budget terms.

4.1 Stages of the Budget Cycle and Opportunities for NGO Involvement

The budget is technically the document that includes the government's expenditure and revenue proposals, reflecting its policy priorities and fiscal targets. But the budget document is just one facet or manifestation of an on-going budget decision-making process, and of a country's system for managing and assessing its spending and tax policies. Looking at any one aspect of the overall budget system in isolation misses the important interaction between the various parts. In this section, we discuss the budget cycle, which consist of the major events or stages in making decisions about the budget, and implementing and assessing those decisions.

The budget cycle usually has four stages:

• Budget formulation, when the budget plan is put together by the executive branch of government;

• Enactment, when the budget plan may be debated, altered, and approved by the legislative branch;

• Execution, when the policies of the budget are carried out by the government; and

• Auditing and assessment, when the actual expenditures of the budget are accounted for and assessed for effectiveness.

Each of these stages creates different opportunities for NGO participation. A brief description of these opportunities is presented below. (A more detailed examination of the types of budget work NGOs can conduct during different stages of the budget cycle can be found in a recent IBP paper, "Can Civil Society Add Value to Budget Decision-Making?", which can be found at http://www.internationalbudget.org/resources/library/civilsociety.pdf.

Budget Formulation

The initial formulation of the budget occurs almost exclusively within the executive branch of government, though it can include a number of actors within the branch. Typically one office — usually the budget office in the Ministry of Finance — coordinates and manages the formulation of the budget, requesting information from individual departments and proposing the trade-offs necessary to fit competing government priorities into the budget's expenditure totals. This process can take a few weeks to several months, largely depending on the extent to which departments are involved and their views are taken into account.

In general, budgets are not built from the ground up every year. Instead, new budgets tend to use the budget most recently adopted into law as a starting point (or baseline), with changes measured from that. This is not to say that all budget changes are purely incremental. The budget can be altered considerably from year to year in response to changes in the economic situation or in government priorities.

The broad contours of the budget are determined in part by its projections of key parameters — such as economic growth, inflation, or demographic changes — that will influence overall revenues and expenditures. The contours of a budget also are influenced by overarching goals, such as maintaining the deficit or debt at a certain level, raising or reducing taxes, or increasing expenditures for certain priority areas.

NGO Role: The executive branch normally formulates the annual budget behind closed doors. In some cases, the executive may release a discussion document or an overview of the budget in advance, but generally the legislature and civil society have little direct access to this stage of the process. Nevertheless, because the budget is rarely constructed from scratch, major parts of the budget may be anticipated by stakeholders outside the executive. This creates an opportunity for analysis and advocacy at the formulation stage. During the development of the budget, non-governmental groups can release analyses on issues known to be under consideration, or that they believe ought to be priorities, with the hope of influencing the budget being formulated. There might also be opportunities for NGOs to establish informal lines of communication with executive branch officials. In countries where the legislative process has little impact on the budget, NGOs may have to concentrate on the formulation stage, as that is when the key decisions are made.

Budget Enactment

The second stage of the budget cycle occurs when the executive's budget is discussed in the legislature and consequently enacted into law. This stage begins when the executive formally proposes the budget to the legislature. The legislature then discusses the budget, which can include public hearings and votes by legislative committees. The process ends when the budget is adopted by the legislature, either intact or with amendments. The budget also can be rejected by the legislature and, in some countries, replaced by the legislature's own proposal.

The budget enactment stage typically is when public attention on the budget is the greatest and information about the budget is made most broadly available. Ideally, the legislature has the resources and time to review the executive's proposal and make amendments. In practice, the legal framework for the budget process or the political system in a country may limit the impact the legislature can have on the budget. Many legislatures also are hampered by their lack of staff and budget expertise. Nevertheless, these constraints do not close off all options to the legislature. Legislators can engage in budget issues by holding hearings, establishing special committees, requesting information from the executive branch, or having public debates.

NGO Role: It is during this phase of the budget cycle that non-governmental groups often have the most potential for input. Since public discussion of and interest in the budget are typically at their high point when the executive presents its budget to the legislature, this creates opportunities for non-governmental groups to get media coverage for their budget analyses. Further, in countries where the legislature plays a more active role in the budget process, non-governmental groups are frequently asked to serve as expert witnesses at hearings and to comment on budget proposals in other ways as well. Their analyses and testimony can influence the debate and highlight important issues about the impact of budget proposals on the poor.

Budget Execution — Implementation, Monitoring, and Control

The next stage of the process occurs once the budget has been enacted. Governments differ widely in how they regulate and monitor spending to ensure adherence to budgets. In some cases, the Treasury (or Finance Ministry) exercises strong central control over spending, reviewing allocations to departments and approving major expenditures. Where departments are more independent, treasuries will monitor expenditures by requiring, for instance, regular reporting by each department of its spending.

In practice, budgets are not always implemented in the exact form in which they were approved; funding levels in the budget are not adhered to and authorized funds are not spent for the intended purposes. Deviations can result from conscious policy decisions or in reaction to changing economic conditions, but concerns arise when there are dramatic differences between the allocated and actual budgets that cannot be justified as reflecting sound policy. While these cases can result from outright abuse by the executive, they may also reflect the effects of a poor budget system and technical problems that make it difficult for the executive to implement the budget in line with what was enacted into law. For instance, the budget may not be clear about the intended purposes of particular funds, while weak reporting systems can limit the availability of information that the executive needs to monitor the flow of expenditures.

NGO Role: Implementation of the budget is, of course, an executive function. Unless the executive issues public reports regularly on the status of expenditure during the year, non-governmental groups have limited ability to monitor the flow of funds. But non-governmental groups do have an interest in an effective and transparent monitoring system that promotes adherence to the budget and reduces mismanagement or corruption. Groups may advocate budget reforms to improve budgetary control. Similarly, they may engage in some monitoring activities. For instance, NGOs can focus on whether amounts for specific projects, such as a school or a road, have been used for the intended purpose. They also can assess the quality of the spending to see if the policy goals associated with the budget allocation are being met, and if government funds are being used effectively.

Outcome Assessment and Reporting — Audits and Performance Evaluations

The last stage in the budget cycle includes a number of activities that aim to measure whether there is an effective use of public resources. Ideally, the executive branch should report extensively on its fiscal activities to the legislature and the public. These fiscal activities also should be subject to regular review by an established independent and professional body, such as audit institutions or an Auditor General. The audit office should have the capacity to produce accurate reports in a timely manner.

Evaluation and auditing are not only necessary for the legislature to exercise its oversight function, they are an integral part of the overall public expenditure management system; reports on performance are necessary to secure the best possible use of public resources. A strong emphasis of modern budgeting reforms is to provide public entities and agencies with information on performance in order to improve their operations.

NGO Role: This budget stage presents a valuable opportunity for budget groups to obtain information on the effectiveness of particular budget initiatives, as well as to advance accountability by assessing whether the legislature and executive branches respond appropriately to the findings of audit reports. This may be one area where applied budget organizations have not sufficiently exploited the potential opportunities. When available in a timely manner, audit reports often document a litany of mis-expenditure, mal-expenditure, and procurement irregularities. NGOs should attempt to spread such information widely and use it to advance reforms.

4.2 Common Problems with Budgeting

Each stage of the budget cycle contains its own challenges to smooth operation. While budget decision-making during the formulation and enactment stages can be highly political, other parts of the budget cycle are dominated by management and accounting issues. For the budget to achieve desired policy outcomes depends, in large part, on the ability of a country's budget system to effectively address the diverse set of political and management issues. Although budget systems in developing countries and emerging democracies vary according to a country's political framework, colonial history, administrative systems, and economic development, many of these countries have similar problems.

As a country's main economic planning document, the budget necessarily reflects assumptions about key economic and fiscal indicators. Yet developing nations typically face a range of macroeconomic circumstances — ranging from a limited capacity to absorb external shocks like falling terms of trade to narrow tax bases that yield erratic levels of revenue — that complicate budgeting and multi-year planning. Vulnerable to rapid shifts in underlying economic conditions, these countries find it more difficult to adhere to expenditure and revenue targets and hold to even the best-laid budget plans.

While some of these macro-economic factors may be beyond the control of emerging economies, the resulting problems are exacerbated by poor budgeting practices. Governments may find it easier to rely on budget gimmicks and other accounting tricks to obfuscate the true state of the budget, rather than try to reconcile the many competing claims on the budget within a sustainable fiscal framework. While these poor budgeting practices typically originate in the executive, weak institutions outside the executive — such as the legislature or the Auditor General — can allow these problems to continue. Independent institutions are needed to provide oversight and ensure accountability, yet their effectiveness is often constrained. For instance, the Auditor General can lack the independence and political clout needed to undertake controversial investigations and to issue reports that may highlight financial mismanagement and even corruption. Similarly, the power of the legislature may appear more impressive in statute than in practice (see the box for more details).

Probably the most widespread problem facing developing countries and emerging democracies is the lack of accurate budget data and socio-economic statistics. While some crucial data are simply non-existent, problems of timeliness, accessibility, and frequency plague those data that are available. These data deficiencies complicate all facets of the budget cycle — from budget preparation to execution and oversight — as well as hinder efforts to improve transparency and accountability. Alongside these shortcomings in needed information is the general problem that these countries face regarding limited capacity, in terms of both skilled personnel and modern equipment.

Many Factors Can Weaken the Budgetary Role of the Legislature Given the legislature's role as the representative of citizens, it is often considered the most appropriate point for civil society budget influence. The effectiveness of this type of civil society involvement depends, however, on the strength of the legislature's power. In theory, legislatures have significant power over the budget. Constitutions usually prevent public funds from being spent without legislative authorization. Debate by the legislature can be complemented with powers to summon expert witnesses and members of the government to give evidence. These powers are augmented significantly where the legislature has the capacity to amend the budget. In practice, legislatures are often undermined by several factors, including the following: The political system and practices in a country may limit the impact the legislature can have on the budget. In parliamentary systems, for example, where the political power base controls the legislative and executive branches, there is strong pressure on the majority in the legislature to adopt the budget without significant amendments. The legal framework and legislature rules frequently constrain the role of the legislature. The legislature may, for instance, have a very short time to review the budget or may be permitted to make only minor amendments (or none at all). Most developing countries legislatures are also hampered by their lack of staff and budget expertise. Without adequate capacity, legislatures are unable to assess budget proposals and recommend changes. These constraints are not present in all countries and do not close off all options to a determined legislature. Legislators can engage in budget issues by holding hearings, establishing special committees, requesting information from the executive branch, or having public debates. Moreover, despite the obstacles above, there is pressure in several countries to increase the legislature's involvement by enhancing its research capacity and legal powers. This is currently the case in Kenya, Malawi, Mexico, Peru, South Africa, Uganda, and Zambia, amongst others. Legislatures and civil society budget groups can combine to establish a potentially powerful oversight partnership, with civil society augmenting the limited outreach and analysis capacity of legislatures. As the opportunities for greater legislature engagement with the budget expand, so too will the opportunities for deeper civil society engagement with the budget.

The list of problems can be overwhelming, and the implied solutions are frequently systemic rather than piecemeal. Consequently, many developing countries are attempting to address these problems through comprehensive budget reform, introducing the principles and practices discussed in the next section. NGOs have a strong interest in promoting such reforms to the budget system because usually it is the poor and powerless who are most adversely affected by a weak or corrupt budget system. A system that fails to promote a strong link between what is decided and what is executed is unlikely to deliver a poverty-focused development policy. Under these circumstances, even when government resources are directed by legislation toward social spending or investments in infrastructure that benefit the poor and have widespread popular support, entrenched interests can wield disproportionate influence over the allocation of scarce public-sector funds. A sound budgeting system — one that is transparent and accountable — is far more likely to yield results that reflect the will of the people.

4.3 Elements of a Sound Budget System

Overcoming the problems of malfunctioning budget processes or poor budget management systems in developing countries is no easy task. In some cases, it may require identifying and then repairing a weak link in the process. But more often it is likely to require an overhaul of the process, and possibly the adoption of new laws to provide meaningful guidance.

In approaching these issues, the core and sometimes overlapping elements of a sound budget system should be kept in mind:

• A legal framework to define institutional roles and responsibilities, including checks and balances;

• A comprehensive budget that captures the totality of government's financial operations;

• Accurate and timely information and projections; and

• A process that is both transparent and allows for meaningful participation by the legislature and civil society.

Most of these elements are cross-cutting and are hard to implement in isolation from each other. It is, for instance, not possible to have a transparent budget system if the budget does not first provide a comprehensive picture of the government's involvement in all parts of the economy.

Legal Framework

A comprehensive legal framework is generally assumed to be an essential component of an effective and enduring budget system. This framework can exist as part of a country's core legal documents, such as its constitution, or can be adopted through other legislation.

A key goal of a legal framework is to help ensure that adequate checks and balances have been established for the budget system. Thus, the legal framework can ensure that there is a role for the legislature and for independent auditing institutions, guarding against the total dominance and potential abuse of the budget system by the executive.

A legal framework that clarifies the roles and responsibilities of the executive and legislative branches in the budget system, and of independent institutions such as the Auditor General, is essential to establishing accountability. The clarification of roles and responsibilities can also extend to the different levels of government, providing an indication of which tier is responsible for delivering which public services or which revenues can be raised by the different tiers.

A legal framework should also establish the rules and regulations that guide the budget decision-making process and the management of government revenue and public expenditure. Even simple rules can be important, such as setting the key dates in the budget process and defining the reporting obligations for the executive. These rules also can dictate the scope of the budget or spell out the often complex procedures surrounding the procurement of goods and services by the public sector. Approaches vary, however, with some legal frameworks including a significant number of procedural details and others giving more flexibility to government managers. Even in the latter case, the legal framework will include a minimum set of requirements to ensure that managers can be assessed and the public interest protected.

Comprehensive Budget Presentation

Ideally, the budget should capture all of the financial transactions of government — the total revenues to be collected, funds to be expended, debts to be repaid, and new and old liabilities to be incurred. The full picture of the government's financial status cannot be captured if some programs, agencies or commitments are "off-budget," or outside the budget.

Without a comprehensive budget it is virtually impossible to have a meaningful debate on the allocation of scarce resources to specific public services. For instance, certain public entities are often not fully included in budget totals, on the rationale that they are semi-autonomous and supposedly self-sustaining. Yet if these entities (whether they are utility companies or national airlines) falter, they are typically bailed out with public funds. These unexpected and unaccounted for expenditures can be a significant shock to the budget and can take funds away from other priorities.

The "PEM" Approach to Establishing a Sound Budget System Public Expenditure Management (PEM) is a relatively new development in budgeting. Advanced mainly by multilateral institutions, it has emerged as an important method to improve budgeting in many transitional and developing countries. Although PEM relies on a number of the core principles of traditional budgeting, it generally places more emphasis on policy outcomes. The PEM concept is based on three broad principles: Aggregate fiscal discipline — total expenditure should reflect explicit decisions that are in line with a sustainable growth-oriented economic and fiscal policy, and not merely demands on spending from different influential actors; Allocative efficiency — allocation of resources, and consequently expenditures, should be based on explicit priorities and program effectiveness; and Operational efficiency — delivery of public goods and services should be cost efficient and of high quality. These principles require an approach to budgeting that goes beyond the traditional annual budget cycle. Therefore, a reform often associated with PEM is the establishment of a so-called Medium Term Expenditure Framework (MTEF). MTEF is a multi-year approach to budgeting, typically covering a three-year period, that attempts to strengthen the links between planning, policy-making, and budgets (see the World Bank's Public Expenditure On-line for more information on issues related to PEM and MTEF http://www1.worldbank.org/publicsector/pe/).

Comprehensiveness also implies providing data that cover several years. At a minimum, budgets should include information on estimated levels of expenditure and revenues in the year immediately preceding the budget year as well as the actual levels for the year or two prior to this. Presentation of actual expenditure and revenue levels provides an important benchmark for assessing budget proposals. The comprehensiveness of a budget also is improved if it projects fiscal policy trends over time — for instance, in the two or three years following the budget year.

Accurate, Relevant, and Timely Information and Projections

Information that is accurate and available in a timely fashion is an essential element of a sound budget system. Quality information is necessary at all stages of the budget cycle: it is needed both to determine the type and magnitude of public services to be funded by the budget and to determine the impact the expenditure of these funds had on achieving the desired policy goals. Without appropriate information, government is operating in the dark, and institutions cannot play their roles effectively.

Unfortunately, developing countries in particular often lack accurate and up-to-date information. While today the availability of personal computers and software can assist the process of collecting appropriate information, it can nonetheless take years to develop the procedures for collecting and reporting the desired information. But the availability of "facts," even if they are open to different interpretations, is a key ingredient of an adequate budget system.

Budgets also need to be based on reasonably accurate projections of available resources. Assuming overly optimistic rates of economic growth or inflation can distort the budget and undermine attempts to put in place a sustainable fiscal policy, particularly over the medium and long term. In emerging markets, where accurate information is often lacking and the impact of global economic trends can be especially powerful, these aggregates are difficult to predict. But the failure to make prudent projections can lead to a reversal of budget allocation decisions when funds fail to materialize. Frequently, such discrepancies affect poverty alleviation programs and social spending more severely than other types of expenditure, such as interest payments on the debt, public sector salaries, or programs with a high political profile.

Transparency and Participation

Transparency and participation transcend the budget process and reflect the nature of good governance in a society. Open and democratic societies are characterized by an informed citizenry, formal channels for public participation, accountability mechanisms, and transparent governing processes. Transparency and participation are therefore the capstone of a democratic budget process. Unfortunately, the opportunity for effective non-government participation in the budget process does not always exist in those developing countries where democratic institutions are still weak and technical capacity is limited.

Transparency can be a matter of both tradition and law. Some countries have a strong tradition of openness and of the public's right to information about all government activities. Other countries are less revealing. In many cases this secretiveness might reflect administrative traditions rather than deliberate decisions, but will still influence the operations of all levels of government. Progressive rules and regulations regarding public availability of information can therefore have a strong impact on the budgetary system, and have strong implications for institutions and organizations outside government that are working on budget issues. Budget transparency can be supported by laws, which typically regulate procedures for budgeting, economic reporting, and auditing. (Two well-known examples where new budget laws improved information on the budget occurred in Australia (http://scaletext.law.gov.au/html/comact/9/5802/top.htm) and New Zealand (http://www.treasury.govt.nz/legislation/fra/explanation/).

A transparent system of budgeting can promote, but does not necessarily guarantee, participation in budget issues by legislatures and civil society. Meaningful transparency, however, is not only about the availability of information, but also its usefulness to the public debate and formulation of policy. Thus it is useful to think of transparency and participation together, and that an aim of transparency is to promote greater participation. Indeed, many of the objectives associated with transparency — such as holding government more accountable, or increasing support for government decisions, or improving efficiency in government programs and projects — cannot be fully realized without complementary participation by legislatures and civil society. For example, information may allow legislatures to monitor executive decisions and performance, but without the opportunity to act on the information they receive, their oversight will be ineffective and the incentives to correct performance will not be present.

In general, transparency and participation can help ensure that the other elements of a sound budget system can achieve their maximum potential. Engaged and informed citizens provide another check and balance to the budget system. Wider participation deepens debate and makes possible greater social consensus on difficult trade-offs.

5. ENGAGING IN APPLIED BUDGET WORK

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"Credibility, accessibility, and timeliness have become our mantra." -Jim St. George, The Massachusetts Budget and Policy Center, United States, at a workshop on budget analysis and policy advocacy in India

Applied budget analysis is a method of conducting research on the budget that is of direct relevance to ongoing policy debates. The research aims to be solid and accurate, but also of practical use to policymakers. To enhance the effectiveness of applied research, a number of critical issues must be addressed before an analysis is released, including how to define and present the budget issue; what data or information is critical for decision makers; when the report is to be released, with an eye on the key dates or steps in the government's budget cycle; and how and to whom the information is presented.

This chapter largely consists of a discussion of some keys to effectiveness for any budget group, including paying attention to how products are disseminated, particularly with respect to the media, and working with policymakers. The chapter concludes with some general thoughts about selecting initial projects and building an audience.

5.1 Accurate, Accessible, and Timely Products

For applied budget analysis to be successful, it must be accurate and sound (and thereby credible), accessible, and timely. See Appendix I for a description of how these guidelines for applied budget analysis have influenced the work of the Center on Budget and Policy Priorities.

Accuracy

A focus on the soundness of the research is important, particularly to ensure the long-term credibility of an organization. Policymakers and the media are going to place greater weight on an organization's work if they are confident it is accurate and reliable. It is possible for an NGO report that has newsworthy content to receive attention in the media even if the underlying work is not solid; but over time, future work will receive less attention if an organization's papers and reports have been inaccurate.

Many groups and researchers have developed expertise in a particular policy area before engaging in budget work, or have developed a reputation as advocates for a certain policy issue.

General budget research by these groups might be labeled as biased towards their issue, at least initially, simply because of their previous focus. It can be difficult to transform a group's reputation as a "one-issue, advocacy organization" into that of a budget group with a broader focus. Accuracy is a key element in this transformation. A focus on the facts, and avoiding inflamed or partisan rhetoric, also are important.

It takes time and effort to be accurate and to develop a reputation for being so, and this attention to accuracy applies not only to written reports but to all communication with the media, policymakers, and public. For new groups it is important to take care in the way the organization is introduced and in the choice of initial analyses and products. The accuracy of initial work may have lasting implications for a group's credibility.

The need to be accurate is one important reason why groups doing budget work might want to collaborate with other groups or researchers who can contribute different expertise. That is, joint research or joint efforts can allow for analysis of a broader range of topics and for stronger analysis. Also, accuracy can be enhanced by using experts outside the organization to review and comment on draft reports. Still, over the long run, organizations should try to develop in-house capacity if they want to build their own research profile and knowledge base.

Accessibility

The accessibility of the research is equally important to effective budget work. Groups cannot assume an audience. They often have to build this audience and show the value of budget work. The target audience will typically not be familiar with the details of the policy issue being analyzed, so it is imperative that the products be produced with the needs of this broader audience in mind. This requires that reports be written in clear language, with understandable terms. Jargon should be avoided. The presentation of information and data should be well structured and should follow a helpful format and include illuminating graphics.

Keep in mind that budget research might be difficult to interpret for groups that do not primarily focus on budget issues. Nevertheless, advocacy groups and grassroots organizations like to use research if it concerns the issues they are interested in, and it is sometimes helpful to organize briefings and presentations oriented towards this audience. It may be useful and effective to produce multiple versions of the same research in different formats and geared towards different levels of technical expertise to reach each of the target audiences.

To be effective, budget reports do not always need to be long, comprehensive, and detailed. Longer analyses can be useful, particularly at the initial stages of an issue debate when general positions are being established. In many cases, however, short analyses are the most useful, niche products that NGOs can produce. These short analyses often flow from the longer background pieces. For instance, after a group establishes its expertise by writing a long, comprehensive piece on programs to reduce poverty, it is then in a position to assess in shorter form specific changes being made to such programs.

What is unique about these short, quick turn-around analyses is that they are unlikely to be prepared by academic researchers. They are also the very analyses in which policymakers and the media might be particularly interested, since these audiences want accessible research about the immediate issues they are confronting. In most cases, legislators and the media are more likely to read a short analysis than a long one, or to read an executive summary than a full report.

Finally, groups should be aware that most of their audience will probably not follow, or find accessible, the latest academic research or government data. This opens a niche — particularly for new groups that may be beginning to develop their own analytical skills and thus may not be ready to produce original reports themselves — to provide short, accessible summaries of relevant current research or data sets.

Timeliness

The timeliness aspect of research includes both the ability to identify relevant research opportunities at the right point in time and the capacity to release the completed work when it can have the most impact on decision makers. An organization should always keep an eye on the policy process and be able to allocate resources to a specific issue when needed. In order to be able to adjust their work to respond to pressing debates, groups should not lock in all of their resources on long-term projects with inflexible time-tables. Timeliness is facilitated by a reliable and continuously up-dated database of budget and budget-related statistics on which analyses can be quickly built.

Timeliness requires that the policy and budget schedule should influence a group's work schedule. To keep abreast of these frequently changing processes, groups will find it useful to build contacts with the legislature and media. These relationships will prove useful in the timely dissemination of materials to targeted audiences. Some groups take this a step further by establishing legislature and media liaisons as the specific responsibility of certain staff members.

Finding Budget Staff It is common for groups to have some difficulty in finding the right individuals to work on budget issues. If one can find individuals with specific training and work experiences in budget issues, that is of course helpful. This could be someone who has worked at the Ministry of Finance, or professionals like civil servants, auditors, and accountants. But groups do not always have such options, and they may be concerned that since budget work can be technically difficult they will be unable to build up their staff. These concerns can be overblown. It is a myth that the only individuals who can effectively conduct budget work are trained economists who have worked in the Finance Ministry. The director of one of the more experienced budget groups, for instance, has remarked at several international meetings how he was able to find the best people for his organization once he learned this lesson, and that his best budget staff includes individuals with backgrounds in areas such as philosophy. So try to find individuals with strong analytical and communication skills, and trust that over time they can learn about budget issues and become effective.

5.2 The Importance of Fully-Engaged and Ongoing Budget Work

Applied budget work is likely to be more effective if it is undertaken on a fully engaged and continuous basis. Intermittent work — such as preparing analyses only around the release of the executive's budget proposal — can have some impact, but it is likely to be limited and sometimes only temporary.

Budget work should be year-round because the budget cycle itself is ongoing throughout the year. The different stages — formulation, enactment, execution, and assessment — stretch over several years and are interconnected. If a group is involved in all or nearly all of these stages it will be more effective in each particular stage. There is plenty of work that can be conducted at any point of the year.

Full-time engagement in budget work is also important because developing budget expertise is more likely to occur if one is fully immersed in budget issues. Jumping in and out of this work makes it much harder for a group or researcher to stay fully informed about current issues.

The technical content of budget work has helped to ensure that budget issues have been monopolized by a specialized community within government, the private sector, and academic institutions. Acquiring the technical expertise to broaden the community of those that understand and influence budgets often requires full-time investment in budget work.

The general conclusion that continuous budget work is likely to have the most impact not only has implications for NGOs — which might want to organize their efforts accordingly — but also for the donor community. Its support of NGO budget work is similarly likely to have the most impact if it is focused on providing a funding stream that enables an NGO to develop and pursue its budget work in a comprehensive, flexible, and ongoing fashion.

5.3 Media and Dissemination Issues

Preparing a report should be considered only the first step of applied budget work. The goal is not only to write a great analysis but to get it into the hands of those who should read it and then to get them to read it. This means that very close attention needs to be paid to how and when products are distributed.

It is therefore essential to develop a release strategy well before a report is finished. Determine which audiences — and which specific people within these target groups — would be most interested in the information, as well as those you would like to convince to read your report. Then determine how best to get the information to them. Sometimes the target list may only be 10 people, other times it may number in the hundreds.

A media strategy is especially important. The media is hungry for timely information and can raise the profile of budget work by providing free publicity for a group's analyses and conclusions. Among other things, a media strategy should identify which parts of the media to prioritize. In some countries, the print media (especially daily and weekly newspapers) is the best target. In other countries, where literacy is lower, the focus may need to be on radio and/or television. Often a strategy calls for using combination of different types of media. Thus groups will find that learning to use press releases and briefings effectively, offering opinion pieces to editors, and developing radio and television presentation skills are all important for implementing a successful media strategy.

Establishing a positive working relationship with the media requires repeated effort. It will take time for reporters to trust an organization as a source of information. The more that reporters regularly review an organization's reports, the more comfortable they will become with its work. The communication should be both pro-active and reactive. A group should make itself accessible and be prepared to provide background information and answer questions from the media on short notice. Similarly, groups must be sensitive to the specific needs and interest of the media. For instance, reporters on a tight deadline might not be able to read a long report, and might prefer a short executive summary. If groups learn to work well with the media, they are more likely to get desirable media exposure.

Knowing when to issue a report — and what issues to highlight — to receive the most media attention is a skill that develops over time. Part of this skill involves not only getting media coverage, but also getting the right kind of coverage. In its search for newsworthy angles, the media will not always report on an analysis in the way a budget group would expect. The media prefers a provocative story, which often means they are looking for conflict instead of reasoned discussion. It is likely to present issues in simple and stark terms, ignoring the nuances that can be important in a public debate. The media, in addition, is not always independent. To reduce the gap between your analysis and the media's reporting of it, it is important when speaking to the media, for example, to establish the nature of the conversation, how it will be used, how the article will be attributed, and what is on and off the record. Given the potential problems, some groups assign responsibility for media liaison to a specific staff member skilled in these matters. But it is also important that analysts, who are most familiar with the technical details, develop at least the basic skills necessary to interact with the media.

Many groups have come to realize that one of their primary roles is to educate the media about budget issues. These issues can be intimidating to reporters who lack quantitative or economics training. If reporters do not understand the issues, they are less likely to write about them, or will write weaker stories. There are many ways to educate the media, such as setting up one-on-one briefing sessions to go over particular issues. Sometimes it is helpful to conduct background briefings for the media on budget issues of particular significance or complexity; these briefings might not directly lead to stories about these issues, but will improve the knowledge of reporters about the issues, so that when they do write about them the stories will be better informed.

Another approach that many groups have used successfully is to run budget training courses specifically for the media (see Appendix IV for an example). Not only can this approach be a valuable way to discuss current policy issues, but it also can create confidence and help establish working relationships.

5.4 Working with Policymakers

Check List for Reports for Policymakers Identify key decision makers, key staff, and key points of entry. Tailor materials appropriately. Media attention spurs political response. "No permanent friends, no permanent enemies." Work across party lines. Share the limelight.

Policymakers are a key audience for applied budget work. With the goal of informing and influencing policy, the products of applied budget work naturally should be accessible to policymakers that are participating in policy debates and making key decisions. The process of making policy varies across countries — depending on the form of government, the key players in the budget process, and other factors — so necessarily the strategies for affecting the policy process will vary. It is therefore important to identify in advance the key decision makers in the policy process and the best times during the process to inform the debate or influence a decision. For instance, in some cases the key decisions will be made within the executive branch, while in other cases the legislature may make the important decisions.

Just as materials should be accessible for non-experts in the media, so too should they be tailored appropriately for policymakers. Public officials are generally interested in reports that are concise, timely, and newsworthy. Analyses designed for a particular group of policymakers (such as those from rural areas or representing minorities) are more effective if they relate issues to the group's perspective and priorities. Further, elected officials typically will see the benefits of policy proposals that can draw public attention and offer political rewards. Indeed, politicians not only hope to receive coverage in the media, but they are also influenced by the media and other high-profile opinion leaders. Thus a good relationship with the media, and the ability to generate media coverage of analyses, are essential to cultivating relationships with policymakers.

Although some policymakers will have an interest in the technical details of a particular policy proposal or program, more often these details are the purview of the staff that assist the policymakers. These staff can have considerable influence over the policy process; thus identifying key staff and providing them with timely analyses can be another way to affect policymaking. Understanding the distinctions among staff can also be important; for instance, a career civil servant (i.e., someone in the executive branch bureaucracy) may have an interest in more mundane issues, such as those involving the administration of a particular program, while a staff person serving an elected official will likely be more focused on the political ramifications of a proposal.

An approach to budget advocacy that generated widespread interest at the IBP's third conference was presented by John Samuels of the National Centre of Advocacy Studies, Pune, India. It includes a discussion of the meaning and concepts of people-centered budget advocacy. The presentation relates in part to this discussion of working with policymakers but it also includes a general discussion on effective advocacy. See http://www.internationalbudget.org/cdrom/sessions/advocacy/advocacy&communication.htm#John

5.5 Selecting Initial Projects

The next three chapters of this guide explore the range of activities that can make up applied budget work. As they show, budget work has many elements and includes a variety of activities that occur at different stages of the budget cycle. The work can involve training people about budget issues, writing about the budget process and system, or analyzing particular budget policy issues. Budget work can assess the budget during its formulation, adoption, implementation, or when budgets are audited.

It is impossible to engage in the full range of budget work when a group is beginning this work. Quite naturally, in selecting initial projects, it is sensible for a group to build on its own strengths. A group that has skills in training might want to focus on budget literacy efforts at the beginning. A group that has expertise in one sector — such as health — may want to focus initially on health budget issues.

It also is useful when selecting initial projects to target issues for which there is a demand for information. There is, for example, a hunger for information about the budget when it is released by the executive branch of government. This is why many groups find it sensible to release reports on the executive's budget. Further, in most countries, and at all levels of decision-making, there is a general recognition among the various actors interested in budget issues — the media, legislatures, other NGOs, even members of the executive branch — that they do not understand these issues or the budget process as well as they would like. They are all potential sources of demand for budget education (as discussed in the next chapter).

In the selection of initial areas of activities, budget process and systems work might not immediately emerge as the first choice. In many instances, however, it is a good starting point. Learning about and analyzing the budget system are important in building an organization's own expertise. In addition, if a national, state, or local budget process is not designed in a manner that allows access and makes information available, then budget analysis work may prove futile. It may be necessary to establish a workable budget process and system before any budget analysis can have an impact upon the policy debate.

Discovering Untapped Demand and Building an Audience At the initial stages of budget work, some groups might be discouraged by the seemingly low interest in these issues. In such cases, it is worth bearing in mind that many groups have found that budget work discovers previously untapped demand and that is possible to be strategic about building an audience. For instance, when the budget project at Idasa began, it started to work with new parliamentarians who had no role in the drafting stages of the budget. During the release of the executive's budget, Idasa helped legislative committees as technical experts to develop questions and strategies for public hearings on the budget. This initial work helped to establish Idasa's long-term relations with the national and provincial legislatures.  At budget time in each year since then, Idasa has enjoyed growing demand for its training and informal services from these initial trainees. Also of note, Idasa's budget work received little press attention in the beginning, but now receives widespread attention. The supply of relevant and accessible information is likely to create demand in many areas related to budget work. Groups working on a wide range of budget and tax issues have found this to be true.

Of course, current policy issues in the national debate on public finance may dictate the scope and focus of work for groups. The Center on Budget and Policy Priorities, for instance, spent considerable effort in the first half of 2001 analyzing President Bush's proposed tax cut. The Center had not expected to dedicate so much attention and staff resources to tax issues, but the United States election in 2000 brought in a new President with a policy agenda based largely on tax cuts, and the focus of the CBPP's work had to respond accordingly.

Another example relates to the Poverty Reduction Strategy Papers in countries which qualify for enhanced debt relief under HIPC conditions. The PRSPs influence the national policy debate, and groups have consequently geared some of their work towards participation in this process. In another illustration, Idasa in South Africa has recently stepped up its efforts to analyze the impact on budgets of the HIV/AIDS crisis, following the release of data on the high level of HIV/AIDS incidence among the poor.

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