Meles proposes & gets $7 billion program budget for 2011/12: Transparency & accountability quietly fade By Keffyalew Gebremedhin

July 26th, 2011 Print Print Email Email

A. The political milieu: Politics, finance & budget democracy In a decision that was only one vote short of unanimity, the Ethiopian parliament in early July swiftly approved the country’s largest ever budget of ETB (Ethiopian Birr) 117.8 billion (about $7 billion) for fiscal year 2011/12. This came through a legislature, where the ruling party enjoys airtight control of the 99.6 percent of the parliament’s decision-making powers. This represents 545 of the 547 seats that it claimed to have bagged in the May 2010 election.

Consequently, this success of the Ethiopian executive branch, which moved the budget into its implementation phase on 8 July, within just 22 days, may only sound music to the ears of President Barack Obama, in the sense of getting things out of one’s way without any hassle. Unlike the omnipotent Prime Minister Meles Zenawi, Barack Obama has for sometime been in terrible ordeals, because of the overall economic situation in the US where the unemployment rate is 9.2 percent, debts have frighteningly stratosphered and a divided Congress is making governance difficult.

The president’s most serious problem, so far yet, is Congressional Republicans’ refusal, perhaps the 2012 election at the corner, to raise US borrowing beyond the $14.3 trillion ceiling. They insist on substantial cuts in spending, which at the time of this writing in the afternoon of 25 July the White House did, for that matter, with no certainty about possibilities of additional revenues in the form of new taxes on the rich most democrats have so much wanted. As it stands now, shortly after the president’s appeal for the help of the American people, the main negotiator for the Republican side House Speaker John Boehner said, “ The sad truth is that the president wanted a blank check six months ago, and he wants a blank check today. That is just not going to happen.”

Come August 2nd, failure to resolve this problem may bring closer to home the dreadful danger of the only living superpower hurtling to its first default. Negotiations are still continuing, lest the wealthiest, the most powerful and most matured democracy suffer self-inflicted wounds in different fronts that would also severely affect the global economy through the bond market nexus and the dollar, as the international reserve currency. It is this situation that former Secretary of the Treasury Lawrence Summers and Obama’s Senior Economic Adviser for the first two years on 17 July heavy-heartedly told GPS’ Fareed Zakaria this was “democracy functioning in the worst possible way.” The weight of that statement must be weighed in spite of and against the backdrop of the US being a very agile society, with quick capacity to return to its senses and also appreciation of the limits of power.

Some a reader may wonder why deal here with the US ordeals. The link with Ethiopia is perhaps more marked by the all and all dissimilarities between the two, save only the need here for discourse to see the links between the budget and finance and the role of democracy in it in facilitating judicious utilization of available national resources. Otherwise, ours stands in sharper contrast with literally only the executive branch of government being the only actor in town.

Even there, its unique characteristic is its capacity to make Archimedes roll in his grave. This is because of its seeming defiance of his respected Archimedean principle, establishing the neat scientific theory and calculation about weight causing proportionate displacement within, shall we say, its habitat, although Archimedes dealt with a body’s weight in water. As its price, this has denied the Ethiopian regime of buoyancy, with the added dead weight of the legislative and judicial branches it has co-opted as its appendages only to pull it down in the drowning position, whose slow motion of the process it could neither feel nor appreciate.

Budget is a very potent arsenal governments have in their hands to shape or influence the attitudes and behaviors of a nation towards the ideology of those in power. As an example, one only need to recall President Reagan’s ideological struggle with the democrats by fighting to strengthen the states at the expense of the federal government, with money and power moving in tandem accordingly.

Budgets touch every family in every locality in every country. As stated above, governments know that the budget is a vital tool in s imposing their political objectives. That is why debates in parliaments on the budget in relatively more open societies are usually heated. If we take, for instance in Sub-Saharan Africa not to go far, this is evident in the cases of Kenya, Uganda, etc., where, despite the difficult in the relations between state and citizens, civil societies and grassroots organizations are very active and their eyes on the ball. Inside the legislature, parliamentarians strive to cut big for their constituencies, or in adverse times fighting to protect existing provisions from cuts. Often, these debates and the free flow of alternative ideas, with the media as active and engaged, find expressions, as against of ours that has become inward-looking and keeps its thoughts to itself because of fear and insecurity.

Of fear and insecurity how insightful the observation by Aung Sui Kyi, affectionately called in Burma Dawn Suu, on 5 July as the Reith Lecturer for 2011 put the Burmese experience in fear to the world. She said in her lecture, when a national army shoots on its people in any country, i.e., as it did in Hungary 1956, Burma in 1988, Ethiopia in 2005, where 193 protestors were mowed down on the morrow of the 2005 election, Tunisia in 2010, Syria for the last five months and Yemen still unsettled, “it really puts a stop to future movements for sometime.” This applies for national reforms of laws dealing with human rights and human dignities, from which finance and budget and resources utilization cannot be seen in isolation.

In all the different stages of the budget processes, in relatively open societies the public also keeps its ears on the ground to reward allies of the people and punish those that betray the defense of their interests. This may be a wishful thinking for our country at this very moment, where the ruling ideology, the preponderance of single party rule and the manner in which society has been organized in that regard, are stacked against interests of the people to engage in an open and freer political environment.

The irony in Ethiopia, nevertheless, is that all those things required for an open, transparent and accountable and effective budgetary system is already in place within Ethiopia’s legal framework. The only problem is that, because of predominance of politics over national interests, they have been rendered inoperable, as described above.

In all the different stages of the budget processes, in relatively open societies the public also keeps its ears on the ground to reward allies of the people and punish those that betray the defense of their interests. This may be a wishful thinking for our country at this very moment, where the ruling ideology, the preponderance of single party rule and the manner in which society has been organized in that regard, are stacked against interests of the people in an open and freer engagement. The irony in such situations, nevertheless, is the fact of that all those things required for an open, transparent and effective budgetary systems are already in place within Ethiopia’s legal framework, although they have been rendered inoperable because of conditions described above.

• The framework of the Ethiopian budgetary system
Article 12 (1) of the Ethiopian Constitution stipulates “the conduct of affairs of government shall be transparent.’’ Unfortunately, power has chosen to ignore it, because of which the power and influence of these have not been brought into the thinking and operations of government, so well known for its strong proclivities for secretiveness. In Article 29 (2), the constitution also stipulates “Everyone has the right to freedom of expression without any interference. This right shall include freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any media of his choice.” Putting all this together, the Ethiopian ministry of finance and economic development came up with the 2009 Layperson’s guide to the public budget process at regional level. In the introduction, it states:

• “Citizens deserve the right to have access to basic services such as health services, education, safe drinking water, agricultural extension services, roads and many other things.

• To fulfil these necessities resources are needed. The country’s income – or revenue – determines how much is available for spending on basic services, such as health and education. When available revenues are not sufficient it is necessary to prioritise between the different needs; develop plans and decide which needs should be fulfilled first and which ones will have to wait. Budgets are financial representations of these plans.

• Citizens also have the right to say about planning and budget priorities and need to know and be involved in how the country’s resources are being used. These rights are provided by the laws and policies of the Government.”

The question of how much of this is translated into reality is an entirely different ball game. That is why the problems of transparency and accountability in Ethiopia have already been distinctly addressed long ago by the United Nations, as part of its efforts in technical cooperation for African countries.

For instance, in 2005 when the United Nations organized expert meetings on “Public Financial Management and Accountability Focusing on Best Practices”, Dr. Stephen Peterson of Harvard University, acting as advisor to the Ethiopian government, presented a case study of the Ethiopian experience in a document entitled “The Challenge of Public Financial Management (PFM) Reform in Ethiopia”. Extensive discussions were held amongst the UN-assembled finance experts. Their conclusion was unambiguous in stating, “A major problem for public accountability in Africa had to do with lack of political will, the culture of rent seeking and the corruption of political leaders. It was agreed that any effective public sector reform should tackle those challenges in the Context of Budget Transparency” (ECA/DPMD/AEGM/05/RPT/1).

• Ethiopia’s development partners quietly play active role in the budget processes
While some signs of openness are being signaled from time to time, merely as ad hoc acts, instead of as part of the governance practices, anchored in policy and institutions, such prospects have been increasingly undermined by ideology serving the interests of those in power to rule with unchallenged authority of a ‘dominant party’ among those it has fostered strongly backed by the reorganization of society by law, repeat, by law to serve those interests. This is reflected in the hostile manner by which any semblance of authority or power is dealt with firmly, opposition parties, civil society and grassroots activities, and the discouragement of open advocacy of alternative ideas.

Nevertheless, since 2006, within the framework of the Protection of Basic Services (PBS), donors have been involved in encouraging government to give due and practical expressions of credibility to its claim of openness, democratic aspirations, public’s right to participate in the affairs of the nation, in accordance with laws of the land. They keep on providing funds intent on facilitating the government organized civil society organizations’ participation, as stakeholders, even at the kebele level (neighborhood association, as the lowest unit of administration) to ensure that government provides information on participation, transparency, and monitoring and evaluation. In terms of meetings to hear what is done, yes, there is motion. But people are constantly reminded of their safety and security first before they say anything about the status quo, if they are in disagreement.

The impact of Ethiopia’s quiet engagement with its development partners, their joint reviews of PBS, has resulted in some limited openness. That is because directly and indirectly, donors have insisted on two things if ever the Meles regime is to get: (a) Additionality of resources, and (b) if budget support, discontinued in 2005, is to be restored. This information is available in the numerous aide memoires, reflecting agreements and reservations during the biannual Joint Reviews and Implementation Support Missions (JRISM) between government and donors. Especially the latest meetings that took place during 2010 and 2011, until mid-June 2011, are revelatory, imbued with important and more transparent discussions, and are available on the webpages of DAG, the World Bank, etc.

The current budget in mind, donors have insisted on three things: (a) macroeconomic stability to control inflation, (b) transparency and (c) accountability at all levels of government. For instance, In the May 9-19, 2011 4th Joint Review and Implementation Support (JRIS) Mission and the Joint Budget and Aid Review (JBAR) for PBS, there were agreed conclusions that have bearings how the current budget processes were handled.

To start with, relations between Ethiopian and donors in the context of the financing of the PBS is in the tune of $2 billion a year and is determined by five principles, known in short as SAFE principles for: “Sustainability in Additionality”, “Accountability and Fairness”, “Fiduciary Standards”, and “Effectiveness”. These form the basis for reviewing progress toward the agreed and shared objectives between government and donors regarding transparency, accountability, the budget, finances and the sharing of information. Government and donors jointly look into woreda activities, even down to kebele levels, what kind of efforts the government exerts, with donor funding, to improve “the quality of basic services in education, health, agriculture, water supply and sanitation, and rural roads delivered by sub-national governments, while continuing to deepen transparency and local accountability in service delivery” (Joint Review and Implementation Support (JRIS) mission, Aide Memoire, April 12-23, 2010).

One area where there are reservations is with the pace and amount of block grants that is allocated to the regions. Accordingly, a review by donors that has graded Ethiopia’s overall performance in fiduciary (financial) standards as “marginally satisfactory”, where participation of actual beneficiaries in budget activities is still lagging behind. In the context of PBS, partners want “the posting budgets at kebele and service delivery points, and posting expenditures” with a view to sharpening the government’s financial transparency and accountability (FTA).

• Impact of these engagements on the program budget for 2011/12
Consequently, this positive movement has also now moved vertically, having the impact and semblance of participation in the review of the national budget processes when the program budget for 2011/12 came for consideration by parliament. In reporting the recommendations of the budget and financial affairs standing committee to the whole house during its reading of the budget on 5 July, its chairman Ato Anno Waqe indicated that his committee had invited, in addition to those mandated by the constitution to present their own budgets to parliament directly, 67 institutions, under Articles 79, 101 and 103, to engage in discussions with individual experts from universities and outside. To that end, an announcement was also put on Ethiopian television, inviting interested individual members of the public to come and participate in the committee’s consideration of the budget.

Unfortunately, the budget document not only is non-transparent, but also explanations provided by the executive branch during the review processes maintain the old tone, the words of which have not failed to unveil their ambivalence about accountability and their unwillingness to give an unconditional support for financial audits and program budget evaluation.

Nonetheless, this is a baby step forward in transparency, although it is no near public participation in the real sense of the word, given the fait accompli actions that have attended the budget methodology, its substances and its overall processes. One also needs to bear in mind that this is only a semblance of openness to stave off criticisms that the Ethiopian budget process does not allow public participation, a longstanding charge difficult to dismiss off hand. What is not clear is why there should be such monstrous variances and conflicts between the laws and regulations on one side and their application in reality on the other? The evidences seem to point toward conviction of the Meles regime that such openings must be controlled not to weaken its hold on power.

The follow-up of this article would deal with what it means for Ethiopia to have program budgeting and whether it would change things. There would also be efforts to analyze nitty-gritties of the program budget for 2011/12.


To be continued…

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