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Open Budget Survey 2017: Where does Bangladesh stand?

M. Abu Eusuf | March 28, 2018 00:00:00

The question of how public resources are mobilised and spent is critical to the relationship between citizens and the state. The government is always expected to respond to this question by ensuring greater transparency in its financial management. However, the state of transparency in government finances differs remarkably across the world as some countries exercise greater state-citizen engagement in public financial management while others do not. In view of the need for considerable public influence over budget decision making, the International Budget Partnership's (IBP) Open Budget Initiative - a global research and advocacy programme to promote public access to budget information and the adoption of accountable budget systems - has been striving to promote public participation in such decision making and thus to enable the government to adopt more pro-poor policy.

As a part of the Initiative, the IBP has been conducting the Open Budget Survey (OBS) since 2006 with a view to carrying out a comparative and independent assessment of fiscal transparency, oversight, and participation at the national level. In performing the assessment, the OBS mainly focuses on such practices as public access to information, good public financial management by executives, and adequate oversight practices by legislature and auditors, which are considered to make representative democracy function well.

Being the world's only independent and comparative assessment of the three major pillars of public budget accountability system - transparency,public participation, and oversight, the OBS takes place once every two years. The latest round of this biennial exercise - the 2017 survey - assessed 115 countries across six continents, adding 13 new countries to the assessment since the 2015 survey. In terms of the assessment of budget transparency, the OBS considers the timeliness and volume of budget information made publicly available and ranks each country on the Open Budget Index (OBI) with a score between 0 and 100. The higher the score is, the greater budget transparency the country exercises through making the following eight budget documents publicly available in a timely and comprehensive manner: (i) pre-budget statement, (ii) executive's budget proposal, (iii) enacted budget, (iv) citizen budget, (v) in-year reports, (vi) mid-year review, (vii) year-end report, and (viii) audit report.

OBI categorises the countries into five major heads - 'extensive information available' with score between 81 and 100, 'substantial information available' with score between 61 and 80, 'limited information available' with score between 41 and 60, 'minimal information available' with score between 21 and 40, and 'scant or no information available' with score 0 and 20. The measure of public participation takes account of the opportunities provided by the government for the public and civil society to engage in making decisions on how public resources are generated and used. Finally, oversight, as another component of budget accountability system, is assessed based on the role and effectiveness of formal oversight institutions, such as the legislatures, national audit offices, and independent fiscal institutions.

Bangladesh lags behind many of its South Asian counterparts in terms of the above-mentioned three pillars of budget accountability system. Moreover, Bangladesh's score on OBI has substantially declined from 56 in 2015 to 41 in 2017. According to the 2017 OBI, the country ranks lowest among the South Asian nations such as Nepal (52), Afghanistan (49), India (48), Sri Lanka (44), and Pakistan (44), although its score is near the global average score of 42.

It may, however, be noted here that one of the reasons for such a decline in Bangladesh's score may be the change in definition of "publicly available" in OBS 2017, which only considers those documents as publicly available that are published online on an official government website in a timely manner. Since publication of government information online is now considered as a basic standard for public availability of the budget documents, Bangladesh can no longer receive score for the publication of some key documents for not producing and publishing in a timely manner. Inconsistency has been observed in the country's performance in making the budget documents publicly available in a given year. Since 2015, Bangladesh's failure to (i) publish the in-year reports and mid-year review online in a timely manner (must be made available to the public no later than three months after the reporting period ends), (ii) produce the citizen budget, (iii) make the pre-budget statement available to the public, (iv) produce an audit report in a timely manner (must be made available to the public no later than 18 months after the end of the fiscal year to which it corresponds) has mainly caused the decrease in score on the 2017 OBI.

In terms of public participation in budget decision making, Bangladesh's score of 13 is slightly higher than the global average score of 12, indicating that the country provides a few opportunities for the public and civil society to engage in the budget process. However, regional comparison suggests that Bangladesh lags behind Nepal (24), Afghanistan (15), and India (15), and surpasses Sri Lanka (11) and Pakistan (6) in enabling the citizens to participate in decisions on how government raises and allocates funds and to hold government accountable for implementing those decisions. For improved public participation, mechanisms such as participatory budgeting and social audits can be adopted to facilitate exchange of views between the members of the public and executive branch officials on national budget process. In addition, preparing audit report on a regular basis and hold legislative hearings on that involving members of the public or civil society organisations can further promote public participation in the budget process.

Given the limited oversight provided by the legislature and the supreme audit institution during the budget cycle, Bangladesh experiences inefficient implementation of its overall budget plan. The country's score of 44 for budget oversight falls below that of India (48) and Sri Lanka (50), although it is equal to the score of Nepal and Pakistan and slightly higher than that of Afghanistan (43). It is important to note that countries having lower level of budget transparency usually undergo lax budget oversight despite the availability of the basic conditions for supreme audit institutions to perform their oversight functions. As suggested by the OBS 2017, legislatures of only 32 countries (28 per cent) have adequate oversight practices. The major problems associated with budget oversight in Bangladesh, which needs to be dealt with immediately, are (i) delay in providing the Executive's budget proposal to legislators, (ii) legislative committee's failure to examine or publish reports on in-year budget implementation online, (iii) little or no consultation with the legislature as the budget is implemented, and (iv) absence of independent review of the audit processes.

As recommended by IBP, Bangladesh should prioritise the following actions to improve budget transparency: i) publish In-Year Report, Mid-Year Report and Audit Report, online, in a timely manner; ii) produce and publish a Pre-Budget Statement online and iii) produce and publish Citizen Report. In order to improve public participation, Bangladesh needs to i) pilot mechanisms for members of the public and government officials to exchange views on national budget matters during the formulation and monitoring of implementation; these mechanisms could build on innovations, such as participatory budgeting and social audits; ii) hold legislative hearings on the Audit Report, during which members of the public or civil society organizations can testify; and iii) establish formal mechanisms for the public to assist the supreme audit institution in formulating its audit program and to participate in relevant audit investigations. Finally, with a view to making budget oversight more effective Bangladesh needs to i) ensure the Executive's Budget Proposal is provided to legislators at least two months before the start of the budget year; ii) ensure a legislative committee examines and publishes reports on in-year budget implementation online; iii) ensure audit processes are reviewed by an independent agency and iv) consider setting up an Independent Fiscal Institution to further strengthen budget oversight.

Dr. M. Abu Eusuf is Professor & Chairman, Department of Development Studies and Director, Centre on Budget and Policy at the University of Dhaka and also IBP Researcher for Bangladesh.

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