Sri Lanka’s budget transparency: improving but still behind international standards

Jun 05, 2020 (LBO) – The Open Budget Survey (OBS) scores countries on the openness of their budget process and is the world’s only independent assessment of information disclosure in public budgets.

The survey is conducted every two years. The 2019 cycle of the OBS has placed Sri Lanka 54th out of 117 countries, with a budget transparency score of 47/100.

Sri Lanka has been gradually improving its budget transparency, increasing its scores from 39 and 44 in the 2015 and 2017 cycles of the OBS.

Despite the improvements, Sri Lanka’s score still falls below the minimum benchmark score of 61 needed to be classified as having a ‘sufficient’ level of budget disclosure under international standards.

Three actions that will improve the budget transparency score

  1. Fuller and more consistent reporting in budget documents
    Three out of the six budget documents published in Sri Lanka scored in the lowest category for comprehensiveness: (1) the citizens’ budget, (2) the in-year reports and (3) the audit report. The Mid-Year Fiscal Position Report of the Ministry of Finance did not even qualify for the survey as it did not include the details required to meet international standards. The mid-year review and in-year reports are critical in monitoring the progress of budget implementation. Hence, it is important that the government make these reports more comprehensive and make them available in more consistent formats.
  2. Strengthen parliamentary oversight
    Sri Lanka’s National Audit Office provides adequate levels of oversight (78 out of 100). However, Sri Lanka’s parliamentary oversight is weak (36 out of 100). Parliament and its Committees act as an important check on the Ministry of Finance and line ministries by approving the drafted budget and tracking its implementation. The Ministry of Finance can strengthen oversight by consulting Parliament before funds are shifted from its allocation in the enacted budget.
  3. Improve public participation in aspects of budget implementation
    Sri Lanka scored 17 out of 100 in the ‘public participation’ category. Currently, Sri Lankan citizens receive no opportunities for participation during budget implementation. To change this, the Ministry of Finance can pilot mechanisms to (a) include the opportunity for public input during budget implementation and (b) proactively engage the inputs of vulnerable communities.

Well-formulated budgets can ensure better implementation

Our past research has shown that although large proposals are introduced in the budget speech, implementation falls short of what is promised. In addition to the measures mentioned above, effective implementation also requires well-formulated budget proposals that are feasible to implement. Hence, it is essential that all revenue and expenditure proposals in the budget are backed by 1) detailed estimates and calculations, 2) feasibility studies, 3) sensitivity and scenario analysis and 4) risk mitigation strategies, in order to strengthen its implementation.

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