Impact Analysis

One method of assessing whether public resources have been used appropriately and effectively is to try to gauge the impact that expenditures have had in relation to the desired outcomes. Although measuring outputs (i.e., the level of public goods and services produced for a given level of expenditure, such as the number of children immunized or the number of girls enrolled in primary school) requires an effective data collection system, it is a relatively straightforward exercise. Evaluating the impact, or outcomes, of expenditure is much more difficult and requires the capacity to identify the value added from a particular government policy or program.

Measuring how effective public spending has been in reaching desired outcomes requires the government to identify appropriate indicators of impact and collect and correctly interpret the data on these indicators. Unfortunately, most developing countries have not instituted systems to comprehensively measure the impacts of their budgets, and many lack the capacity to implement such systems. Although measuring impact of government spending is challenging, it is critical to public finance systems that use scarce public resources to meet the needs of its people.

This is an area in which civil society organizations (CSOs) have been able to supplement and strengthen government efforts. For example, India’s Public Affairs Centre has used citizen report cards to measure public satisfaction with the delivery of public services.

A budget impact analysis methodology can be adapted from one context to work in another. For example, Hakikazi Catalyst in Tanzania implemented a variation of the citizen report card to assess impact of government spending. Hakikazi developed PIMA cards (pima means measure in Swahili) to provide a simple, flexible evaluation tool that enables communities to gather qualitative and quantitative information on inputs (what funds did the community receive?), outputs (how were the funds used?), and outcomes (how did the projects affect the community?) of government expenditures on poverty-reduction strategies. Based on the results, the district government and local communities decide on the next steps to be taken to address communities priorities and to continue information-sharing in a systematic way.

By engaging in Impact Analysis, CSOs can:

  • Generate evidence on the effectiveness of public spending
  • Complement governments efforts to evaluate budget execution
  • Strengthen oversight
  • Involve the general public in holding the government accountable

Useful Guides and Publications

Our Money, Our Responsibility: A Citizens Guide to Monitoring Public Expenditures

by Vivek RamkumarThis IBP guide presents thorough descriptions of the stages of the budget process and various tools and methodologies that civil society can use to influence policy decisions, monitor the effective and efficient use of public resources, and assess budget execution and its impacts. The strength of the guide lies in its detailed case studies of civil society budget work throughout the budget cycle and around the world.