October 26, 2010Matthew Olivier
Governments leverage Government Resource Planning (GRP) solutions to enhance budget transparency and accountability
The International Budget Partnership (IBP) recently released its Open Budget Survey (OBS) 2010 report. According to their press release, the IBP feels that “global report reveals poor transparency and accountability in government spending”. But previous low scorers also demonstrated how all countries can improve transparency quickly with little cost or effort. These countries — Afghanistan, Liberia, and Mongolia — were showcased in the report as substantially increasing budget transparency.
How did this happen? Because:
- Afghanistan’s Open Budget Index (OBI) score jumped 13 points from 8 in the 2008 Survey to 21 in the 2010 Survey
- Liberia’s score jumped a remarkable 37 points on the OBI as it increased from 3 in the 2008 Survey to 40 in the 2010 Survey
- Mongolia’s score on the OBI doubled from 18 in the 2006 Survey to 36 in 2008 and further increased by 24 points to 60 in the 2010 Survey
And while these countries do not rate the highest on the OBI (South Africa earned that spot, with New Zealand a close second), they do deserve special recognition as they have made significant improvements in budget transparency.
OBS Transparency Stars1
The following are short excerpts from the OBS 2010 report for the countries of Afghanistan, Liberia, and Mongolia.
Afghanistan’s OBI score increased from 8 in the 2008 Survey to 21 in 2010, a jump of 13 points. This improvement is a result of the government’s decision to publish budget documents not previously published, including the Mid-Year Review and the Audit Report.
Since 2002 several donors have worked closely with the Ministry of Finance and provided technical assistance to help the government manage donor funds more effectively and in a more transparent manner. For instance, the government used the World Bank’s support to install and operate the Afghanistan Financial Management Information System. The Ministry of Finance has been using this financial management system on an ongoing basis to manage the core operating budget of the government and produce detailed monthly reports on the execution of the budget (which are made available online). While such improvements to the public finance management system have been ongoing during the past few years, the result of these efforts in the form of timely, comprehensive, and accessible budget reports has become visible more recently.
Liberia’s score on the OBI increased from 3 in the 2008 Survey to 40 in 2010, a remarkable jump of 37 points. The improvements came about because the government published a number of documents it was not publishing earlier, including the Executive’s Budget Proposal, In-Year Reports, the Mid-Year Review, and the Audit Report.
Mongolia’s score on the OBI doubled from 18 in the 2006 Survey to 36 in 2008 and further increased by 24 points to 60 in the 2010 Survey. Mongolia, which in a short period of time has gone from being a country that provided scant budget information to one that provides much more comprehensive information (its score fell just short of placing it in the “significant information” category). While none of the countries scoring poorly in previous surveys have yet to meet best practices for budget transparency, they have been able to expand transparency by implementing simple, low cost measures — demonstrating that the achievement of budget transparency depends primarily on a government’s will rather than its resources. Perhaps nothing illustrates this central point more than the fact that Mongolia modestly outperforms high-income countries like Italy and Portugal.
What is also noteworthy about the governments of Afghanistan, Liberia, and Mongolia is that they all use the FreeBalance Accountability Suite to modernize their public financial management process, improve governance, and increase transparency. The following describes these systems in more detail.
The Government of Afghanistan
The Government of Afghanistan uses the FreeBalance Accountability Suite to run its Financial Information System (AFMIS). The AFMIS was first implemented in 2002 and is the official accounting and reporting system to record government wide financial transactions for Afghanistan. The AFMIS provides management accountability at various levels of Government of Afghanistan, and offers flexibility in accounting and reporting of financial data from the FreeBalance Accountability Suite. Key functionality includes control and disbursement of funds, accounting records maintenance that supports budget execution, revenue collections records for the central government. In addition, it provides support to the Cash Management and Debt Management functions, and provides financial management information to Ministries, Agencies and Donors.
In May, 2010, the AFMIS Rollout team in Nuristan printed its first cheque from the AFMIS. With this achievement, the rollout of AFMIS across the provinces of Afghanistan was also completed. Nuristan was the last frontier in the team’s effort to connect all the provinces to the AFMIS network. All 34 provinces of Afghanistan and all Line Ministries at the centre now have system-based budget controls, and can execute system-based payments with a very high degree of fiduciary control.
The Government of Liberia
The Government of the Republic of Liberia uses the FreeBalance Accountability Suite to drive government modernization through effective fiscal management. The Government automates all public finance budget transactions. Budget preparation, expenditure controls, procurement, monitoring, reporting, payroll and human resource management will be implemented. The FreeBalance Accountability Suite will be implemented in five sites including the Ministry of Finance, Civil Service Agency, General Auditing Commission and it will connect to the Central Bank of Liberia. This implementation includes the FreeBalance Public Financials Management, Government Performance Management, Public Expenditure Management and Civil Service Management. The FreeBalance Civil Service Management payroll functionality will manage a civil service workforce of 40,000 employees.
The Government of Mongolia
The Government of Mongolia uses the FreeBalance Accountability Suite to manage its Government Financial Management Information System (GFMIS). It currently serves 294 local treasury offices under 31 regional treasury offices. Sixty-six local treasury offices are in the process of being connected. The GFMIS uses a single treasury account and is used for payments, expenditure control and reporting.
The FreeBalance Budget System is customized software based on the FreeBalance Accountability platform. It is web-based, serves all 5000 budget entities nationwide, and serves central government, local government, social insurance and Human Development Fund. It is used for budget preparation, determining monthly allocations for budget execution, and automating submission and approval of virements.
The FreeBalance Accountability Suite provides the government of Mongolia with auditability and transparency of budget adjustments, visibility to the public via a web publishing capability, and interfaces with existing systems that impact on budgeting both within the Ministry of Finance and those maintained by other government agencies.
1 Open Budget Survey, International Budget Partnership
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