The Hidden Corners of Public Finance: A Synthesis of Country Case Studies that Look Beyond the Core Budget

Budget transparency is key to ensuring that citizens, oversight institutions, media, and other actors can access information and hold governments accountable for how they raise and spend public resources. As part of its efforts to promote budget transparency worldwide, the International Budget Partnership $($IBP$)$ developed the Open Budget Survey $($OBS$),$ which measures the public availability and comprehensiveness of eight key budget reports that all governments should publish according to existing international standards.

But not all public spending happens through the budget, and not all public resources are captured in budget documents. Certain categories of government activity may be carried out by state$-$owned enterprises $($SOEs$),$ for example in the form of quasi$-$fiscal activities $($QFAs$)$ or financed through extra$-$budgetary funds $($EBFs$)$ or tax expenditures $($TEs$).$ To better understand how these $$hidden corners$$ of public finances work, how they could be made more transparent and subject to greater accountability, and what are the key issues and topics that groups interested in monitoring each of these four areas should consider, IBP commissioned eight case studies looking at the above four topics in different countries.

The case studies revealed a wide variety of country circumstances and approaches, but in many cases show that in order to gather information on these four areas of public finance it is necessary to look beyond the key budget documents that the Open Budget Survey focuses on$.$ Many of the governments in the case study countries approve laws and publish reports that are specific to government$-$funded activities and operations beyond the core budget. These take the form of SOE annual reports, special appropriation laws for EBFs, and TE reports, among others. Some areas, such as QFAs, remain more difficult to detect and monitor, and some extrabudgetary institutions are still not reported on in any detail.

Adapted from: Petrie, M$.,$ Paolo de Renzio, & Moon, S$.(2014).-$ Applied research on open and accountable public finance management and civil society budget advocacy, IBP Paper.

Task:

Discuss the meaning and intention of this statement: $$The local government equitable share uses demographics and other Stats SA census data in a formula set out in the Division of Revenue Bill.$$

Present and explain the equitable share formula by referring to the link and caselet