DRAFT: Budget Transparency and Country Systems December 4, 2013, Seoul Forum on Using Country Systems to Manage Climate Finance

Overview Thesis: Climate finance will be used most effectively, and is more likely to be substantial, if handled in a transparent and accountable manner by national budget systems. Corollary thesis: Climate funds are flows of public expenditures, how well they work depends on how well funding flows generally work in a country. Conclusions come from 15 years of IBP and NGO partner experience with general budget issues in developing and developed nations. Three lessons/developments from that experience of particular relevance: 1) Transparency and accountability have wide-ranging benefits 2) Consensus norms have emerged 3) Useful tools for assessing transparency and monitoring budgets have been implemented, including the IBP’s Open Budget Survey

Why Should We Care About Transparency? Open budgets can expose corruption and waste and improve spending efficiency and effectiveness. Help match resources with national priorities. Help governments secure cheaper international credit and improve debt management. Help governments build trust with their citizens and give citizens voice and dignity. Can increase donor confidence, potentially boosting available resources. 3

GIFT High-Level Principles Variety of actors have become engaged on budget transparency and sought coordinated mechanisms to advance it. Global Initiative for Fiscal Transparency formed in Includes robust and wide-ranging group of engaged stakeholders. Led by the IMF, the World Bank, the Philippines, Brazil and the IBP. One early priority and key accomplishment: a set of umbrella principles that span the various diagnostics, tools, and good practices that exist. All current tool have these in common. 10 umbrella principles, endorsed by UN resolution in

5 GIFT Principles, Access to Fiscal Information Everyone has the right to seek, receive, and impart information on fiscal policies. [Could substitute “climate” for “fiscal”] Governments should publish clear and measurable objectives for aggregate fiscal policy. The public should be presented with high quality financial and non-financial information. Governments should communicate the objectives they are pursuing and the outputs they are producing.

6 GIFT Principles, Governance of Fiscal Policy All financial transactions of the public sector should have their basis in law. The Government sector should be clearly defined and identified. Roles and responsibilities for raising revenues, incurring liabilities, consuming resources, investing, and managing public resources should be clearly assigned. The authority to raise taxes and incur expenditures on behalf of the public should be vested in the legislature. The Supreme Audit Institutions should have statutory independence. Citizens should have the right and they, and all non-state actors, should have effective opportunities to participate.

7 Open Budget Survey: A Tool to Assess Country Systems IBP Survey measures 1) public access to budget information; 2) public participation opportunities; 3) strength of formal oversight institutions 125 multiple-choice questions, facilitate comparisons Implemented by network of individual country researchers, with peer review, optional government review 2012 Survey was the fourth round, covered 100 countries

8 Key Findings of OBS Major gaps in information. Average score 43. General direction positive. Huge improvements in some countries. With political will, can make major changes quickly. Few opportunities for public participation. Oversight institutions have moderate levels of formal powers, but struggle to exercise these in practice.

Other OBS efforts Establishing a real-time budget transparency tracker focused on publication of the eight key budget documents Can leverage network to do quick studies of specific topics

Civil Society Budget Tracking Civil society has growing track record of successfully monitoring expenditures Aspects monitored (From IBP’s “Our money, Our responsibility: A Citizens’ Guide to Monitoring Government Expenditures) –Budget execution –Procurement –Impact measurement –Audit and legislative oversight

Possible Implications General efforts to improve budget transparency and accountability will ultimately benefit climate finance Climate finance standards and tracking might be able to borrow from lessons learned from general budget experience –Importance of transparency and accountability –General norms can help inform climate norms –Budget assessment tools and research networks could be leveraged

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