In the Case Studies section
eTransparency Case Study No.6
Improving Financial Accountability in Sri Lanka Through Web-Based Budget Publication
Case Study Authors
Mr M.D.R.R. Senanayake (natbgt@sltnet.lk)
Application
Sri Lanka's National Budget Department (NBD) has begun making government budget data available via a Web site, with a pilot project in 2003 that aims to lead to full publication in 2004.
Application Description
The National Budget Department (part of the Ministry of Finance) has, since 2001, progressively introduced budget procedures requiring line agencies to prepare their annual estimates within expenditure ceilings framed under a medium-term budget framework in line with international good practice. Additionally, the UN-standard functional budget classification (COFOG: Classification of Functions of Government) has been introduced. The new procedures and budget classification are supported by a computerised information system - the Integrated Budget System (IBS). This was initially piloted for use within the Ministry of Finance in the 2003 budget preparation exercise. It was then upgraded and enhanced with the addition of a Web-based module, supporting the interactive collection and negotiation of the 2004 line agency budget estimates using a password-controlled routine.
The NBD Website (www.nbd.gov.lk), launched in May 2003, has been used to publicly display a summary of the 2003 budget allocations as well as budget circulars (administrative instructions) and the 2004 Appropriation Bill (legislative approval). The Website is designed to enable the public, as well as the line agency accountants, to view up-to-date budget estimates. This is a new procedure as only the senior politicians and civil servants previously had access to current budget data (largely because of the major cost and effort required in publishing supplementary paper-based editions of the budget estimates). An e-mail contact point in the Ministry of Finance is provided on the Website for those wishing to raise direct questions. It is anticipated by the NBD that this increased transparency of budget information might lead to the enhancement of political and administrative accountability.
Sri Lanka's Financial Regulations, revised in 1992 and due to be updated in 2004, refer only to the publication of budget data in printed form and there is currently no official guidance on the issuance of budget information in electronic format. Current plans are to display the 2004 Final Budget Estimates in full in an appropriate form, in three languages (English, Sinhala and Tamil), on the Website and to periodically update these figures with the approved changes as they occur throughout the course of the budget year.
Role of ICT
The Integrated Budget System is the ICT heart of the process; a custom-built information system. The Web-based module for the program is based on SQL Server and JSP/Java technology. The system is the first (and, at the time of writing, only) interactive G2G (government-to-government) e-government application in Sri Lanka.
Application Drivers/Purpose
The IBS has been designed to support the budget preparation procedures as they are upgraded in iterative steps towards the improved information flows required to meet the policy goal of a medium-term, performance-based budget. This target was adopted in 2001 after extensive discussions between the Ministry of Finance and international financing institutions. The design of the IBS has been a collaborative venture between the NBD and consultants working on a Public Expenditure project funded by the Asian Development Bank. The decision to use the Web to collect and disseminate budget information was taken by the NBD on the consultants' advice, to increase efficiency in government-to-government communication and to lead step-by-step to the increased transparency of budget information.
Stakeholders
The Ministry of Finance - particularly its National Budget Department - is the primary stakeholder and there is, currently, only one other major stakeholder group (the line agency budget holders) and two secondary stakeholders (the IBS system developers (the donor-funded consultants: PricewaterhouseCoopers Lanka), and the international financing institutions). From 2004, with the planned information dissemination of the Final Budget Estimates through the Website, there are potentially two further stakeholder user groups (parliamentarians, and civil society organisations). The international financing institutions will also be a user group for the system.
Transparency and the Poor
There has been no direct support for transparency to the poor. However, the performance indicators for capital projects in the Final Budget Estimates relate to the sector action plans in the National Development and Poverty Reduction Strategy document. Once the 2004 planned developments to the system are undertaken, NGOs working on behalf of the vulnerable and the poor will be able to cross-reference the details contained in the line agencies' 2004 capital budgets with the national poverty reduction strategy.
Impact: Costs and Benefits
A technical assistance project funded by the Asian Development Bank has provided the international good practice functional expertise to inform the design of the medium-term, performance-based budget procedures. Together with costs for the national consultants who built the IBS, training and system implementation, overall costs for the information system component of the project were approximately US$150,000. Costs for the hardware used are not included as they are attributed to broader infrastructural development within the Ministry of Finance.
The project is already seen to have delivered some efficiency improvements but, given its pilot status, any transparency gains will start to materialise only from 2004 onwards. It is expected that such gains will include but not be limited to: informed parliamentary debate, media coverage based on financial facts, and NGO commitment to ensure financing in support of the poverty reduction strategy. Such non-quantifiable benefits will take some time to accrue and perhaps the greatest benefit in quantifiable terms might be the willingness of the international financing institutions to commit additional aid funds on the basis of increased transparency and accountability in government financial management.
Evaluation: Failure or Success?
There has been no specific evaluation yet of the e-transparency elements of this project. The Asian Development Bank is scheduling a formal evaluation of the overall technical assistance project in 2004 and the consulting firm is currently carrying out a corporate evaluation exercise that is showing a mixed success/failure profile for the overall project. The success has been achieved at an operational level where there is strong departmental ownership of the project and its objectives. The failure lies in the inability, to date, to raise the profile of the project and to gain a senior (political) champion.
Enablers/Critical Success Factors
- Committed, experienced team . Although lacking a senior political champion, the project has benefited from the commitment, ownership and enthusiasm of the NBD team. Importantly, the team brought in subject-specific expertise on planning and budgeting that, probably more than IT expertise, is fundamental to this type of financial e-transparency project.
- Expert design . The project has benefited from the presence of an international expert who brought in experience from related projects to help in the design of procedures.
- Long-term consultant availability . Consultants on e-transparency projects are sometimes "here today and gone tomorrow". On this project, though, the consultants have been made available on-site over a long period, thus enabling them to develop a deep understanding of the project and to make a strong contribution to system development and maintenance. This has also enabled an iterative approach in which system modifications have been steadily incorporated in response to feedback from users.
Constraints/Challenges
- Poor quality data foundation . Good quality data is the foundation on which any e-transparency system is built. In the case of this particular system, there have been problems obtaining good quality data on factors such as budget forward forecasts, and performance measures.
- Skills shortages . Computing skills are an important part of any e-transparency system, but these should not overshadow the other skills that any new system will require. In the case of this particular system, there has particularly been a shortage of skilled staff in government able to implement new budgeting procedures.
- Recurrent costs . Although capital costs on e-transparency projects may be donor-funded, there is often an expectation that any recurrent costs will be met locally. For IBS, some line agencies have found problems in funding its operational costs, such as dial-up Internet charges.
Recommendations
- Adopt international accounting standards . For finance-related e-transparency systems, there is a logic in building international accounting standards into the system. This makes it easier to exchange ideas and knowledge across national borders, and it also helps to future-proof the system.
- Adopt a pilot, incremental approach . IBS' success to date can be attributed to the fact that it has adopted a pilot rather than 'big bang' approach to implementation, and that it has introduced new procedures in a controlled, step-by-step manner, thus enabling staff gradually to build up competencies and to buy-in to the changes.
- Use prototyping . By adopting evolutionary, prototyping software development methods, the project has been able to accommodate on-going procedural changes, so that the software and processes can be incrementally changed in unison.
Further Information
Case Details
Case Editor : Richard Heeks.
Author Data Sources/Role : Project Management Role.
Centrality of Transparency : Mixed. Type : Reporting. Audience : Mixed. Content : Financial. Sector : Economic Services.
Outcome : Too Early to Evaluate.
Region : South Asia. Start Date : 2001 (completion launch due 2004). Submission Date : December 2003.