Why is transparency about public expenditure so elusive?

Abstract

Fiscal transparency is fundamentally important but difficult to achieve. The conceptualization of transparency has to be more sophisticated than current rhetoric implies. Analytical tools relating to the generic concept of transparency can be applied to public expenditure. Achieving transparency about public expenditure presents challenges that require explicit strategies in the context of what can be very different sets of local conditions. This article identifies the specific meaning of transparency about public expenditure, defined in terms of the four directions of transparency: inwards, outwards, upwards and downwards. It identifies barriers to the effective transparency of public expenditure, characterizing these as intrinsic or constructed. Tackling these barriers, especially those constructed by policy actors, constitutes a route towards more effective transparency, not only about public expenditure itself but about surrogates for it. It is not just quantity that matters: different varieties of transparency will have differential effects on the achievement of public policy objectives. How transparency mechanisms are structured will therefore shape their impact on public policy – on efficiency, on equity and on democratic accountability. Points for practitioners Public expenditure transparency is fundamentally important, but elusive. The difficulty stems from technical complexities and from the political process. Governments that genuinely wish to improve public expenditure transparency must address intrinsic barriers (such as low public understanding of budgeting numbers and their relationship to national accounts) and desist from building constructed barriers (such as misleading spinned numbers and substituting surrogates for direct public expenditure). It is not just the quantity of transparency that matters: different varieties of transparency will have differential effects on the achievement of public policy objectives. How transparency mechanisms are structured will shape their impact on public policy – on efficiency, on equity and on democratic accountability.