The Absence of Transparency: An Economic Cost and An Infringement on Citizens’ Constitutional Rights

Press Release

15 December 2014

The public budget, with both revenues and expenditures, is the mirror reflecting the government’s social and economic biases and the choices governments make for the citizenry. It is thus the most fundamental, important expression of the political and economic preferences of the political regime. It is also the tool with the most impact on citizens’ daily lives and livelihood, in the form of public services provided by the government, the mechanisms used to finance these services, and the distribution of sources of financing.

Despite its utmost importance, the state budget in Egypt remains one of the most intractable of documents, incomprehensible for ordinary citizens, specialists and non-specialists alike, making it difficult for the citizenry to participate in shaping public economic policy.

The lack of budget transparency cannot simply be treated only as a serious breach of democratic rules and good governance. It leads to severe economic and financial problems related to the spread of corruption and waste, meaning that public spending is not reflected in the improvement of citizens’ lives. Knowledge of the state budget should thus not be limited to experts and specialists.

According to international institutions and based on international experience, transparency is defined as the timely provision of information in a comprehensible way that facilitates participation. Hard numbers are not considered transparency.

In the framework of defending the constitutional right to knowledge and information, the Egyptian Initiative for Personal Rights has released a new paper, Monday, titled, “Budget Transparency: the Economic Necessity Missing from Egypt.” The paper looks at the importance of immediately applying international standards for budget transparency by providing and making available information about public spending and revenues in a simple form that is accessible to all citizens. The study attempts to break free from the argument of budget transparency as an unaffordable democratic luxury given the country’s current political and security conditions. Instead, the paper address budget transparency for what it really is: an economic necessity that we cannot afford to disregard in light of the successive, ongoing economic crises we face, such as the increased budget deficit, the exponential growth in public debt, and the severe impact of these circumstances on numerous service sectors with the greatest effect on the poor.

Notwithstanding the excuses repeated by government officials, budget transparency is even more needed from the standpoint of the economy and resource management in current conditions, particularly since citizens are being asked to bear austerity measures without knowing what has been spent and how. Nor do they know who will assume the burden of increasing revenues, and who pays from their own pocket. Items in the state budget in Egypt do not correspond to clear objectives for public expenditure and cannot be used to hold the government to account for citizens’ right to good quality public services. It does not reflect the geographic distribution of public expenditure or the maximum or minimum share of the government wage structure, opening several avenues for waste, corruption, and inefficiency. It also breaches the simplest principles underlying the social pact between the state and citizenry.

Sometimes it is claimed that developing the tools to support budget transparency is a process that requires massive resources, especially in light of current attempts to reduce government spending. But the paper looks at several studies that show that budget transparency leads to the provision of funds and their more efficient use, making it even more appropriate for times of economic crisis. The proof is the numerous states similar to Egypt with similar, or even lower, income levels, but much higher levels of budget transparency. These include Uganda, which earned 65 percent on the Open Budget Index for 2012, compared to Egypt’s 13 percent, although the average per capita yearly income in Uganda is $571—less than $50 a month—while Egypt’s average monthly per capita income is $300.

In addition to the lack of budget transparency, there are several financial entities that exist outside the budget, like the special funds that consist of public funds collected from citizens even when citizens have no access to monitor its spending or purposes. There are agencies that do not clearly inform the citizenry in a standardized way what their relationship is with the public treasury and how funds are diverted to and from them. This raises many questions about the management of public funds and further upsets the relationship between the government and citizens, especially in light of austerity policies whose burden is borne by the poor.

The paper urges societal and political oversight, as well as accounting oversight, of these vague financial relationships.

“Transparency is not just reeling off a set of numbers and data on expenditures and revenues,” said Reem Abdel Haliem, a researcher on economic justice at EIPR. “It means providing information that citizens understand which affects their lives and expresses the state’s appreciation of citizens’ awareness and participation in decision making. For the budget to be transparent, the wages section, for example, must clarify the salary of every occupational level, the share of each in the budget, and the reason for increases or cuts. Expenditures must be linked to clear objectives understood by the citizen for which the state can be held accountable.” Abdel Haliem wrote the paper with Osama Diab, a researcher on corruption at EIPR.

The study concludes with a set of recommendations focusing on the need to make all aspects of public spending subject to accountability, and parliamentary, and popular oversight by seriously dealing with the growth of special funds and accounts; restructuring the statutory framework to make it explicitly obligatory to provide detailed, simplified information to citizens during the preparation, adoption, and review of the public budget and to require budget oversight; foregoing the extreme generality used in public budget items; providing information on spending on minimum administrative levels, especially in public-service provisions that affect citizens, in order to ensure more efficient oversight; developing more efficient anti-corruption tools; and mechanizing all government financial transactions to make them more transparent and ensure stricter oversight.

To read the paper in Arabic click here