Increasing transparency and social expenditure in public budgets Iván Fernández Espinoza Technical Secretary of the Social Front Quito-Ecuador

Overview Context and Background Some economic and social indicators Evolution of social spending The program: Technical Secretariat of the Social Front-Ministry of Economics and Finance-UNICEF Results of the program Challenges: Social Spending, Transparency and Human Rights

Context and Background: economic indicators Ecuador is located in Western South America, bordering the Pacific Ocean of the Equator, between Colombia and Peru. It has around 13 million inhabitants and the economically active population is about 5 million The GDP per capita of 2002 was 1,706 USD, which locates Ecuador among the least developed in the region The country has experienced various crisis. The last one in 1999, characterized by high and increasing inflation, a drop in production, worsening of external accounts, fiscal and financial crisis

Context and Background: social indicators Negative impact on the social sector High levels of unemployment and undermeployment: 16% and 60% in 2000, respectively, around 10% and 50% in 2003, respectively. Inequality, poverty and exclusion

Evolution of overall social spending Downward trajectory of social expenditure between the 1980’s and the 1990’s. Low investment in priority social programs. Poor administration of social sector’s resources. Cyclical expenditure. Social expenditure among the lowest in Latin America Low levels of civil society participation and lack of transparency in social expenditure figures The trend has been reversed during the previous years, with an increase of public social expenditure (education, health, welfare, employment and housing) and an increase in social programs’ investment.

Evolution of overall social spending

The program: Social Front, Ministry of Economics, UNICEF Basic Social Agenda: five components Social support network Conditional cash transfer (Bono de Desarrollo Humano) Subsidies: food and nutrition provided by social programs Programs targeted towards vulnerable population Children development fund Plans for provision of universal services (education and health) Plans for job creation and micro-financing Common component: protection of social expenditure, expenditure targeting and impact evaluation

The program: Social Front, Ministry of Economics, UNICEF Ecuador has started a process of public social expenditure transparency: Budget formulation Expenditure follow-up Expenditure evaluation Strategic alliances had been formed: Ministry of Economics and Finance, UNICEF, The Social Front Active participation of civil society, for example: Fiscal policy observatory and Children’s rights observatory

The program: Social Front, Ministry of Economics, UNICEF ElaborationNegotiation Approval UNICEF TSSF Execution Evaluation and control Closing Programming Technical Assistance Information and technical assistance Civil Society monitoring Information and civil society monitoring Resources

Results: increasing social spending

Results: increasing transparency Social Front Minister’s Council: Budgetary discussions and definition of a negotiation strategy with the Ministry of Economics and Finance Budgetary dialogs ( ): Congress, The Social Front, Ministry of Economics and Finance, Fiscal Policy Observatory, UNICEF, Civil Society, Mass media Follow up and monitoring of Social Expenditure: quarterly monitoring of overall social expenditure and priority social programs. The Social Front, UNICEF, Fiscal Policy Observatory.

Results: increasing transparency Information flow: Social expenditure module. Coordination with the Ministry of Economics and Finance, Ecuador’s Central Bank, UNICEF and the Social Front. Information with institutional, geographic and administrative-unit disaggregating Information that has been verified at three levels and spread out through periodic publications Civil society informed and interested about social expenditure Technical assistance processes (Technical Secretariat of the Social Front and UNICEF) have strengthened institutional capacities: Ministries and Congress.

Challenges Integration of economic and social policy Improve the amount and quality of social expenditure Quantity: International standards. Reduce cyclical variations in social expenditure Quality: coverage goals and services provided, priority social programs focalization Budgets should be understood as a shared responsibility between the government and civil society Strengthening of information culture Public expenditure as a way to reduce poverty, inequality and to guarantee human rights.