One of the many areas in which democracies are suffering from weakened legitimacy is how governments raise and spend public resources. It seems to many that budget decisions are made by unaccountable leaders acting behind closed doors, perhaps at the behest of powerful actors. Meaningful debate around spending and revenue choices can happen only in countries where sufficient budget information is publicly available, and where citizens have opportunities to influence decisions. Where budget information is not available, citizens have fewer reasons to trust their governments, perhaps leading to a vicious circle of poor transparency, weakened democracy and increasing public mistrust.
The problem is that this information is increasingly hard to find. New results from the Open Budget Survey — an independent assessment of budget transparency, participation and accountability around the world — show that levels of budget transparency are stagnating or declining across the world, for the first time since the survey started in 2006. More than 70 percent of the 115 countries covered fail to provide sufficient budget information to the public. The situation with participation is even worse, with only a handful of countries providing adequate opportunities for citizens to engage meaningfully in budget processes.
To be sure, the link between democracy, transparency and trust is not always straightforward. On one hand, as we discuss in a recent paper, governments too often perceive transparency and participation as constraints on their autonomy and discretion. On the other, they underestimate the increased legitimacy that might come from opening up their budgets. Similarly, where citizens and civil society groups push for fiscal openness and engage directly with governments on their fiscal choices, it is at least plausible that distrust will fall and accountability will rise.
Open budgeting and better policy go together
We are able to say this because we have looked systematically at the existing research on the effects of fiscal openness. We find that increased budgetary disclosure and participation are consistently associated with better-quality budgeting and with better governance and development outcomes. More transparent governments have lower deficits and debt, and are better able to access international finance through lower borrowing costs. Higher levels of transparency are also associated with lower corruption. In Uganda and Indonesia, publishing detailed budget information on grants to local schools and the audit of road projects led to dramatic declines in corruption and waste of public resources.
There are also examples in which direct citizen participation in budgeting helped allocate resources to priority sectors and, in some cases, contributed to better development outcomes. For instance, Brazilian municipalities that introduced participatory budgeting — a process through which communities get involved in selecting projects that government should fund — saw their infant mortality rates drop significantly more than did other municipalities. One shouldn’t push these findings too far — we don’t have enough rigorous evidence to reach strong conclusions — but they certainly point toward the positive benefits that open budgets can bring.
Governments don’t always want open budgets
So why don’t more governments open up their budgets? One reason is that proponents of increased disclosure and participation tend to focus on the costs to politicians rather than the benefits. One study we reviewed found that noncorrupt mayors of Brazilian municipalities audited before elections got a substantial boost to their reelection rates when local radio stations disseminated this information. As politicians usually want to stay in office, they might well be interested in knowing this.
If more politicians knew that opening up their budgets could help get them reelected, improve fiscal management, reduce corruption and boost development, they might be more interested in fiscal openness. Those who still avoided disclosure might then look as though they have something to hide. Similarly, if more citizens knew of the potential benefits of using available information and pushed to engage more directly with policy decisions, they might find ways to more effectively channel their demands and get governments to respond. In an era when democracies are under increasing strain, fiscal openness could help revive them.
Paolo de Renzio is senior research fellow with the International Budget Partnership and adjunct professor at the Pontifical Catholic University of Rio de Janeiro.
Joachim Wehner is associate professor in public policy at the London School of Economics and Political Science.
This article is one in a series supported by the MacArthur Foundation Research Network on Opening Governance that seeks to work collaboratively to increase our understanding of how to design more effective and legitimate democratic institutions using new technologies and new methods. Neither the MacArthur Foundation nor the Network is responsible for the article’s specific content. Other posts in the series can be found here.