Public Sector Governance and Accountability Series: Budgeting and ...

394 Salvatore Schiavo-Campo
greater. The issue of corruption in local government is given added emphasis
by the current efforts of donors to support decentralization initiatives.
One useful pointer, among others, is to look at the local government
budgetary allocation for “travel,” “information gathering,” and “entertainment”—easy
sources of illicit cash in conditions of inadequate expense
recording and monitoring. But, in general, the issue of petty corruption
cannot be tackled successfully by prosecuting a few small malefactors. When,
as in many African countries, badly inadequate government salaries are a
reason or an excuse for bribery, corruption must be addressed in the context
of a comprehensive reform of the civil service—which would provide a living
wage to lower-level employees and adequate market-related compensation
to higher-level officials. However, doing so in isolation would simply produce
better-paid crooks. Thus, a salary review and increase must be preceded—
or at least accompanied—by credible strengthening of the performance
monitoring and accountability mechanisms, with swift and certain penalties
for malfeasance, especially for higher-level personnel.
The Entry Points
The two main avenues to begin strengthening accountability and improving
public financial integrity are found at the very start of the budget process
and at its end. Ex ante, to begin addressing corruption in procurement, the
ministry of finance could exert closer scrutiny of expenditure proposals to
determine the soundness of the proposed procurement, the need for and
expected use of the goods, the unit price, the availability of budget funds,
and the respect for legal requirements—before the inclusion of the expenditure
item in the budget. This scrutiny could be accompanied by a procedure
for spot-checking smaller proposed contracts to prevent contract splitting.
Ex post, as Aristotle recommended 23 centuries ago, a strong and
independent external audit function is critical: “Some officials handle large
sums of money: it is therefore necessary to have other officials to receive and
examine the accounts. These other officials must administer no funds
themselves . . . we call them inspectors or auditors.”
In the medium and long terms, a variety of additional reforms are needed,
depending largely on the characteristics of the specific country. There is no
magic remedy for corruption in public financial management, no guarantee
that progress in any one area will be irreversible, and no approach that is
exactly suitable to all countries. Nevertheless, the generally effective efforts in
anticorruption follow the broad example of the Hong Kong, China, independent
commission against corruption, 8 which emphasized three concurrent