Four Myths About Fiscal Transparency

4 minutes read time
About 15 adult Congolese men and two women sit in wooden school benches in a classroom listening to a speaker who is seated on a table at the front of the classroom
Representatives of civil society organizations in Brazzaville, Republic of the Congo attend training on budget processes and accountability projects.

Four Myths About Fiscal Transparency

On September 12, the U.S. Department of State released the 2017 Fiscal Transparency Report. This report reviews 141 governments worldwide and assesses whether those governments have made complete and reliable budget information widely and easily accessible to their citizens. While budget documents may not seem like a sensational topic, they are a critical part of a functioning democracy. When governments embrace fiscal transparency, they foster greater public engagement and encourage discussion on budget matters by bringing ordinary citizens into the process. Fiscal transparency also helps strengthen the effectiveness of U.S. overseas development programs. 

This is the sixth year that the Department of State has produced an annual report dedicated to fiscal transparency, and we have noticed four trends that defy common perceptions. With the release of this report, we’d like to push back against these myths: 

Myth 1: Only high-income countries meet the minimum requirements of fiscal transparency  FALSE 

A government doesn’t need to be rich to be open and honest with its citizens about how it raises and spends money. In fact, of the 73 countries that met the minimum requirements, only 20 are ranked as high-income. The rest are either low-income or middle-income. This shows that a country’s income is not a determining factor in its ability to meet the minimum requirements of fiscal transparency. 

Myth 2: Meeting the minimum requirements of fiscal transparency requires HUGE and OVERWHELMING changes in government policy  FALSE 

Sometimes all that is needed for a country to elevate its status to meet the minimum requirements of fiscal transparency is a series of small steps, such as making budget documents publicly available or producing more detailed budget documents. Afghanistan was able to meet the minimum requirements in 2016 and 2017 by focusing on producing more detailed information in its existing budget documents and publishing the audits of its financial statements. These adjustments, on top of existing government commitments to transparency, helped Afghanistan meet the minimum requirements of fiscal transparency for two years in a row. Afghanistan is now poised to tackle even more complex budgetary challenges. Using technical assistance provided by USAID, the government is focused on strengthening its statistical data to improve the effectiveness of its public financial management, which in turn will provide to the Afghan people a far more accurate assessment of the government’s budget. 

Myth 3: A country that fails to meet the minimum requirements has NO fiscal transparency  FALSE

Many countries that fail to meet the minimum requirements are actually doing quite well in certain areas, and simply fall below the mark in other areas. With the help of the U.S. Fiscal Transparency Innovation Fund (FTIF), Haiti’s civil society created documentary films explaining the budgetary process and the importance of increasing government transparency and accountability in financial management. The fund also helped create an online government budget portal visited by hundreds of Haitian citizens each month. These efforts proved invaluable in educating citizens on how to hold their government accountable for its spending.

Myth 4: Once a government meets the minimum requirements, there is no more work to be done on fiscal transparency → FALSE

Togo is one of eight countries in sub-Saharan Africa with the distinction of consistently meeting the minimum standards of fiscal transparency in our annual report. Nonetheless, it understands that meeting the minimum standards is just a starting point. Last year, thousands of Togolese citizens held their government accountable for missing funds from the 2013 Africa Cup of Nations soccer tournament. Because of a baseline standard of fiscal transparency, citizens were aware of the missing funds. The Government of Togo then released an independently audited account of the funds and publicly acknowledged that it can and must do better in managing Togo’s money. By keeping its budgetary process transparent, the Togolese government has empowered its citizens to keep their government accountable. 

Fiscal transparency can play a role in establishing healthy dialogue between a government and its citizens. Despite what many think, it is also an achievable goal that 1) can be reached by any country, regardless of its income, 2) can usually be met through a series of small, strategic changes in policy, 3) can be met in part, even when countries do not fully meet the minimum requirements, and 4) requires continued government effort and focus, even after minimum standards have been met.

About the Author: Patricia M. Haslach is the Acting Assistant Secretary for the Bureau of Economic and Business Affairs at the U.S. Department of State.

Editor’s Note: This entry is also published in the U.S. Department of State’s publication on Medium.com.