Budget Credibility: Is the Government Doing What It’s Saying and Saying What It’s Doing?

Jason Lakin, International Budget Partnership— Mar 07, 2019

When the International Budget Partnership (IBP) put out an open call for 25 civil society organizations to research budget credibility issues in their countries last year, we thought we would struggle to reach that number. But more than 70 groups applied, and their research was just one component of our larger Assessing Budget Credibility project, which looks at the degree to which governments raise and spend public money in accordance with approved budgets, and the causes and consequences of any deviations.

Wall of Ideas from the Community of Practice Meeting. Image via Twitter, #trustingbudgets

The global response we received from civil society was our first indication of the resonance of this issue, but the enthusiasm at our multi-stakeholder Budget Credibility Community of Practice meeting (held in early February 2019 in Washington D.C. – read the meeting summary note here) confirmed its salience. As a Rwandan participant from the government sector put it, budget credibility is “very relevant because the government is there to serve and deliver through their budgets … if you do not spend what you planned, that means …you were not able to deliver what you promised.”

One takeaway from our meeting was that not everyone thinks of budget credibility in the same way. IBP’s definition has focused on deviations between budgeted and actual revenues and expenditures – and our research finds that indeed these deviations are significant, with an average of 10 percent underspending in a sample of 32 countries.

But participants at the Community of Practice meeting offered broader definitions of credibility. A civil society colleague from Kenya explained, “budget credibility is important because it helps us define how far we are to achieving the impact in service delivery.” Others agreed that the we should not strictly focus on financial credibility, but on the service delivery goals of the budget. Participants gave examples of underspending on family planning, vaccines, school feeding programs, and scholarships, among others.

Other participants thought about budget credibility in terms of accountability, which goes beyond the budget and incorporates examining political speeches or sector plans to determine to what extent the promises governments make are backed up by budgeted resources.

Budget Credibility, illustrated. Image via Twitter, #trustingbudgets

The title of this post comes from a definition of budget credibility offered by a civil society colleague from Sri Lanka, and it captures one of the themes at the meeting: that governments should do more to explain and justify budget deviations, and civil society organizations must seek out such explanations and use them to inform their advocacy. IBP’s analysis of 24 countries, based on civil society partner-led research, shows that 1/3 of governments provide no explanations for budget deviations, and most governments provide reasons that are too general or generic to shed much light on what is actually happening. Without these justifications, it is difficult for governments and civil society to engage in constructive dialogue. Participants agreed that governments have an obligation to provide adequate public reasons for budget deviations, and that IBP could further refine our criteria for government explanations for budget deviations and provide them as a resource for governments interested in improving. There was also interest in learning more about good practices, and good processes for getting good practices for improving credibility, building on ideas shared by CABRI, Afghanistan, Lesotho, and Rwanda.

Is there really money that is just sitting on the table that governments are failing to spend? Not always. Participants encouraged us to distinguish between cases where credibility is low because of fantastical revenue projections, and cases where there is actually money available that is not spent.

A final exciting area that emerged from the discussion, and that generated considerable interest among participants, was the relationship between budget credibility and equity. A small group discussion on equity and credibility was the best attended during the meeting. A presentation by the World Bank using BOOST data suggested that subnational governments that have higher capacity to spend their budgets as approved are those that are more developed; if low credibility is a problem particularly for poor regions, then inequality can become entrenched in decentralized systems where the poorest local governments cannot deliver on their budgets. Equity and credibility also intersect in national budgets. For example, if the regional distribution of national projects changes between the formulation and implementation of the budget in low credibility contexts, this may lead to greater inequality, even for funds that are not decentralized.

The Budget Credibility Community of Practice left the meeting with plans to continue to investigate the impact of budget credibility around the world. Our civil society partners will continue to examine budget deviations at the country level, and IBP plans to produce additional research and tools that better define the budget credibility problem and provide possible solutions that encourage action, including further analysis of the link between credibility and equity.

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