Posted by Bruno Imbert,[1] Serge Ramangalahy,[2] Claire Schouten[3] and Alex Kreko.[4]
Fiscal transparency is always important as an aid to fiscal policy and good budgeting but has becomes critical during the COVID-19 pandemic because of high levels of public spending and debt, to avoid misuse of scarce public funds, and to enhance accountability.
The IMF’s Fiscal Affairs Department (FAD), in collaboration with the International Budget Partnership (IBP) and with the financial support of the European Union (EU), organized a second edition of the Regional Seminar on Fiscal Transparency in Francophone Africa[5] on November 30 through December 8, 2020. The aim of the seminar was to help these countries strengthen their fiscal transparency practices through peer-to-peer learning and sharing of tools and good practices. It gathered various stakeholders (e.g., ministries of finance, parliamentary finance commissions, supreme audit institutions (SAIs), civil society organizations (CSOs), and donors) from 16 countries,[6] with a special focus on fiscal policy responses to the COVID-19 pandemic.
In most of the countries the pandemic had an immediate impact on the fiscal balance and debt liabilities, as well as creating contingent liabilities and other fiscal risks. According to data published in the IMF’s Fiscal Monitor (October 2020), the impact of additional budgetary expenditure and tax relief measures across the 16 countries amounted to about USD 7 billion, or 2.4% of GDP. Below-the-line transactions and quasi-fiscal operations amounted to a further USD 2 billion (0.7% of GDP). To this must be added off-budget financing (donations and loans from development partners, companies and individuals) that were mobilized to mitigate the impact of the pandemic, as well as monetary policy measures implemented by the central banks.
Transparency in francophone countries in 2020 presents a mixed picture
The overall picture of fiscal transparency in Francophone Africa remains challenging, even leaving aside the impact of the pandemic. The last Open Budget Survey (2019) found an average improvement of five points in the region’s overall transparency score compared to 2017, with an average score of 28 out of 100. Better performers include Benin, Burkina Faso, Cameroon, Chad, Côte d’Ivoire, Madagascar, Niger and Rwanda. In general, this improvement reflects greater availability of draft budget laws and in-year fiscal reports in the region, as well as greater comprehensiveness of budget documentation.
Nevertheless, the survey also highlights that none of the countries in the region provide a sufficient level of budget information (defined as a score of 61 points or higher) and that only half of key budget documents are made publicly available. Few countries provide meaningful opportunities for the public, particularly people living in poverty and other under-represented groups, to participate in the budget process. Finally, weaknesses in oversight by legislatures and SAIs hinder their role in holding the executive to account during the budget process. These findings are in line with those of the PEFA assessments conducted in the region.
The dilemma: responsiveness vs. regular PFM practices
The workshop discussed the budgetary and accounting mechanisms used in the region to execute, monitor and control their emergency spending. Initially, many countries gave priority to a rapid response to the pandemic by overriding some regular PFM mechanisms, introducing more flexible control, expenditure and procurement procedures, and using off-budget mechanisms. Only later did some countries revert to more regular PFM procedures and reinforce their ex post monitoring and control mechanisms.
Highlighting country experiences and good practices
Despite the general weakening of PFM rules, examples of good practice and innovative tools can be found in the region. Some countries strengthened the recording and reporting of the resources allocated to COVID-related programs. Examples include the adaptation of the budget classification in the Democratic Republic of Congo; a dedicated system for controlling emergency spending in Burkina Faso; and the use of the Single Treasury Account to channel funds in Guinea.
The innovative use of financial information systems allowed some countries to monitor COVID-related spending on a daily basis (e.g., Senegal) and to ensure secure, quick and transparent payments to beneficiaries while reducing fraud (e.g., Togo's NOVISSI program). Lastly, some countries introduced special schemes for auditing emergency spending (e.g., the Gabonese parliament’s special commission on COVID-19 measures).
Enhancing crisis management mechanisms in the future
Even though a process of normalization has begun, emergency spending will continue in many countries. The restoration of regular management and control procedures will be a challenge. Immediate objectives for improving transparency in 2021 include: (i) better coordination among the various stakeholders, (ii) integrating all resources and costs into the budget for 2021, and (iii) developing dedicated websites and outreach strategies to monitor crisis-related spending.
In the medium and long term, countries can make better use of existing resources and networks, including the Global Initiative for Fiscal Transparency. Improved financial planning processes (e.g., development of an emergency procedures manual and integrating extrabudgetary entities into the budget) and information systems will also help countries manage future emergencies more efficiently and effectively, as will stronger collaboration between governments, CSOs and SAIs.
A French translation of the article is available on the following link.
This article is part of a series related to the Coronavirus Crisis. All of our articles covering the topic can be found on our PFM Blog Coronavirus Articles page.
[1] Economist at the Fiscal Affairs Department (FAD) of the IMF.
[2] Long-term advisor for FAD in Mali.
[3] Senior Program Officer at the Open Budget Initiative (OBI)
[4] Program Officer at the Open Budget Initiative (OBI).
[5] The first edition was organized in January 2019, in Dakar (Senegal).
[6] Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Republic of Congo, Cote d’Ivoire, Gabon, Guinea, Madagascar, Mali, Niger, Democratic Republic of Congo, Senegal, and Togo.
Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.
