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Open Budget Initiative

Nine in 10 countries surveyed by the Washington-based Center on Budget and Policy Priorities (CBPP) fail to provide adequate information on their budgets needed to keep governments accountable to their citizens.

The CBPP's International Budget Project surveyed some 59 countries to assess the availability and quality of their budget documents. The results, released in October, find that most governments could do a better job of informing citizens about how they spend public funds.

"In 53 of the 59 countries examined, citizens are limited by lack of access to information," said Warren Krafchik, executive director of the International Budget Project. "A country's ranking on the Open Budget Index is a measure of that government's commitment to accountability and transparency."

Six of the countries surveyed -Angola, Burkina Faso, Chad, Egypt, Mongolia and Vietnam - keep their budgets completely under wraps until they are adopted, while 39 percent provide "minimal" or "scant" information on their budgets.

In many cases where countries failed to meet the IBP standard for transparency, governments do produce information on public spending, but choose not to make it public.

"What is clear is that the level of budget transparency in a country is strongly influenced by the willingness of the government to be accountable to its citizenry, and that lack of capacity to produce information is not an overriding constraint," states the report.

While IBP calls the results "disappointing", the study also demonstrates that greater openness can be achieved without placing significant demands on governments.

Pamela Gomez, who headed the project, notes that "countries could achieve major reforms simply by releasing all of the budget documents they already produce to the public."

"With that small change, more than half the countries would improve their performance and, more importantly, citizens would be significantly more informed about the budget."

The results of the IBP survey are based on a questionnaire containing 122 questions, in which answers to 91 of these questions were averaged to create the so-called Open Budget Index. The remaining questions examined the governments' ability to ensure accountability, such as through an external auditing body.

The IPB intends to repeat the report in two years, and raise the number of countries examined to 80.

The Center on Budget and Policy Priorities is a non-profit research organisation funded mainly by foundation grants. The IPB is supported by the Ford Foundation, the Open Society Institute, the Flora and William Hewlett Foundation, and several European governments.


Revised EU financial regulations pave the way for greater transparency

Revised financial regulations that would have European Union governments disclose the recipients of EU funds has been endorsed by the member states, a move has been hailed as a victory for transparency by advocacy groups.

Having passed this first stage, the new regulations must still be debated in the European Parliament in November.

Farmsubsidy.org, a non-profit organisation that has pushed EU governments to make their agricultural subsidies public, has marked this is a positive development. However, the group has expressed two reservations regarding the new provisions on transparency.

One is that there may be too much "wriggle room," as it is not clear whether exceptions will be allowed, nor do the rules stipulate what level of disclosure will be required (for example, will only payments over a certain amount be reported).

Also of concern is when the new transparency rules come into effect. According to the current draft rules, the section on disclosure requirements won't apply until the 2008 budget.

"The EU is conducting a 'mid-term review' of its entire €100 billion budget in 2008-9, so it is critical that transparency is in place well before this time," says Jack Thurston, co-founder of farmsubsidy.org. "How else can European citizens express their views on how Brussels spends their money?"


WTO Disciplines and Biofuels

A report commissioned by the International Food & Agricultural Trade Policy Council (IPC) highlights the need to clarify how World Trade Organization rules apply to trade in biofuels.

While biofuels currently contribute a "miniscule" portion of the world's energy needs, demand has risen sharply in recent years, particularly in OECD countries which mandate the use of biofuels as a fuel additive. Developed countries, especially in Europe, may soon find that a scarcity of available land curbs their ability to meet the rising demand for biofuels through domestic production alone.

"Even if they could, this would not necessarily constitute the most cost-efficient or environmentally sustainable approach," notes the report. "The most ideal land for sugarcane and oil palm trees, currently the most energy efficient biofuel feedstocks, is primarily located in developing countries in tropical and sub-tropical climates."

Given their comparative advantage, a number of developing countries are clearly interested in producing biofuels for export. So far, however, developed countries have encouraged domestic production of biofuels, as a means to foster rural development and promote greater energy security.

Currently at the WTO, ethanol is classified as an agricultural product and biodiesel as an industrial product, a distinction that "doesn't make a lot of sense," according to one of the report's authors, Robert Howse.

There has been little work done on how WTO rules apply to biofuels, and the report is therefore "exploratory" in nature. It looks at whether biofuels should be classified as agricultural, industrial or environmental goods; how biofuels subsidies should be treated under existing WTO rules; and how domestic regulations and standards may conform with rules on international regulations and technical barriers to trade.