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

54 Salvatore Schiavo-Campo
Good Governance and Public Expenditure Management
Good governance rests on four pillars: accountability, transparency, predictability,
and participation. Accountability means the capacity to call public
officials to task for their actions. Transparency entails low-cost access to
relevant information. Predictability results primarily from laws and regulations
that are clear, known in advance, and uniformly and effectively
enforced. Participation is needed to generate consensus, supply reliable
information, and provide a reality check for government action. These
concepts are universal in application but relative in nature. Accountability is
a must, but it does not become operational until one defines accountability
of whom, for what, and to whom. Transparency can be problematic when it
infringes on necessary confidentiality or privacy. Full compliance with regulations
is not a great advantage if the regulations are inefficient. And it is
evidently impossible to provide for participation by everybody in everything
and unwise to use participation as an excuse to avoid making tough but
necessary decisions. It is also clear that none of these four components can
stand by itself: each is instrumental in achieving the other three, and all four
together are instrumental in achieving sound development management.
For example, accountability mechanisms in the budget process are hollow if
financial information is not reliable, and they are meaningless without
predictable consequences.
In public expenditure management, a lack of predictability of financial
resources undermines strategic prioritization and makes it hard for public officials
to plan for the provision of services (and gives them an excellent alibi for nonperformance,
to boot). Predictability of government expenditure in the aggregate
and in the various sectors is also needed as a signpost to guide the private
sector in making its own production, marketing, and investment decisions.
And budgetary rules must be clear and uniformly applied to everyone.
Transparency of fiscal and financial information is a must for an informed
executive, legislature, and public. Normally, it takes place through the filters of
a competent legislative staff and capable and independent public media. It is
essential not only that information be provided, but that it be relevant and
in understandable form. Dumping immense amounts of raw budgetary
material on the public does nothing to improve fiscal transparency. The IMF
(International Monetary Fund) Code of Good Practices on Fiscal Transparency
underlines the importance of clear fiscal roles and responsibilities; public
availability of information; open processes of budget preparation, execution,
and reporting; and independent reviews and assurance of the integrity of
fiscal forecasts, information, and accounts (IMF 2001). (Although not all