eGovernment for Development

eTransparency Case Study No.15

Portales de Transparencia: Delivering Public Financial Information to Citizens in Five Latin American Countries

Case Study Author

Miguel Solana (msolana@worldbank.org)

I. Introduction

For over fifteen years, multilateral development banks and bi-lateral agencies have been extensively involved in financial management operations in Latin America. The objective of these operations has been twofold: i) to increase efficiency of public sector financial management; and ii) to increase transparency.

With regards to the first objective, there has been important progress. Several Latin American countries now have centralised financial management systems. These systems typically are managed by the Ministry of Finance, to register budget implementation, treasury and accounting for the whole central government. Recently, these systems have been expanded to include other functions such as asset management and payroll. It is believed that the impact on public financial management has been considerable (see, for example, Box 1 below).

The increase in transparency, the second objective of these operations, has been less of a priority until recently. As second- and third-round public financial operations funded by the World Bank are either under preparation or execution in several countries in the region, the access to information on the governments' financial accounts has become a critical issue for increasing transparency, building trust and responding to civil society requests for more open and accountable government. Fulfillment of these objectives is considered crucial to building good and effective governance.

This case analysis will discuss the achievements of these operations, highlighting gaps and what actions could be taken to overcome these. Section II will explain what a Portal de Transparencia or transparency portal means. Section III will comment on different features of these portals in five countries - Peru, Guatemala, Bolivia, Colombia and Chile. Section IV will briefly compare these portals. Section V summarises enablers and constraints, while Section VI will recommend further actions for improvement.

Box 1. Guatemala's Integrated Financial Management Project.

Since 1995, the World Bank has been involved in the modernisation of public finance in Guatemala in order to promote more transparent, efficient, and effective public sector financial operations. The results of this modernisation effort have been substantial and include: i) Widespread reduction in prices paid for supplies due to modernised procurement and payment systems implemented under the project; ii) Streamlined payments, increased number of electronic funds transfers, and reduced number of government bank accounts to reduce time and transaction costs while maintaining transparency; iii) Creation of a unique relational database that provides immediate and detailed information on all recorded financial transactions, thus providing an audit trail as well as relevant and timely budget execution information for managers at various levels; iv) Access for legislators, private citizens, NGOs, and other stakeholders to proposed and executed national budgets at several dedicated in-country sites.

The first project implemented in Guatemala received the World Bank President's Award for Excellence in 1999.

The reform process in now in its third phase. Among other actions, this operation involves: i) the migration of the system to an internet-based technological platform; ii) de-concentration of the system to executing agencies within ministries, such as schools and hospitals; iii) extension of the system to municipalities; iv) development of an e-procurement system; and iv) implementation of a system to increase efficiency and effectiveness of auditing processes within the Office of the Comptroller General. The project also aims at defining a sustainability strategy to maintain the reform process once the project finishes.

II. What is a Transparency Portal?

The Portales de Transparencia (transparency portals), as they are commonly known in the region, are a relatively new initiative by Latin American countries to push forward the financial transparency and accountability agenda. In short, these portals are websites solely devoted to publishing public financial information. The Ministry of Finance in each country generally maintains the portals.

Depending on the portal, financial information regarding public companies, municipalities and government procurement can also be found. The scope and detail of the information published varies considerably country by country, depending on regulation, quality of the website and the government's commitment to transparency.

The information in a portal of this kind normally includes budget law, definition of technical terms related to the budget, and manuals and other related support documents. Most of the portals analysed also publish country macro-economic data, information on domestic and external debt and budget execution for past years.

Additionally, several portals offer information regarding current-year budget execution. This information includes month-by-month revenue and expenditure information, by institution, category, and relative to approved amounts. This information is retrieved from the government's financial information systems which, as mentioned above, are being financed by multi-lateral or bi-lateral lending institutions in several countries in the region.

The information regarding budget execution is highly transactional and, in order to be automatically updated, the portal needs to be directly linked to the financial management information system. It is believed that this type of "real-time" information is critical to increase transparency, as users can track, with a minimal lag time, how budgets are being executed and how tax revenues are evolving. Table 1 offers a short description of the types of information that may appear in a transparency portal and its main source.

Table 1. Types of Information in a Transparency Portal

Type	Source	Examples
Non-transactional	Legal Department, Budget Department, Portal's web-team	Laws, regulations, technical terms, definitions
Transactional	Debt systems, Fiscal Affairs Department	Debt information, macro-economic information, past years' budgets
Highly transactional	Financial management information systems	Current-year budget execution, past years' budget execution, accounting

It is important to highlight that most of these portals are still being developed, and therefore upgrades and improvements are frequent. However, the nature of the portals is determined by the strategy and objectives to be accomplished in each of the countries that are featured in this study.

III. Application Description: Transparency Portal Content in Five Countries

Peru, Guatemala, Bolivia, Colombia and Chile are the countries selected for this analysis ii . In 2003, all five of the countries implemented operations in public financial management financed either by the World Bank or the Inter-American Development Bank. The investment has been considerable, while the objectives, especially in the area of transparency (in fact, only a minority of these projects include a component to develop a transparency portal), have only been accomplished partially. Under this section, some of the notable positive and negative features of each of the portals will be mentioned.

Peru. Peru is arguably the most advanced country in Latin America with regards to financial transparency. Under a comprehensive transparency strategy, several initiatives have been undertaken, including: the transparency portal, law on access to financial information, promotion of citizen involvement in transparency processes, and the elaboration of an assessment of the liabilities of the State.

The Ministry of Finance considers the transparency portal an essential element of this strategy for two reasons: i) the amount of information that can be consulted; and ii) the unlimited access for any citizen with Internet access. These two aspects serve as the main pillars of the country's transparency strategy iii . It is believed that this alignment between the strategy and the portal has very positive impacts on the quality of the portal itself and the information presented. The overall strategy has derived from a strong commitment from institutions to present reliable, updated and comprehensive financial information that has had a significant impact on the quality and reliability of the information registered in the financial information system, which is the data source of the portal. The government's support to the portal also has been considered essential; the portal was launched by the president and has been legitimised by a presidential decree.

On the operational side, the portal, launched in 2001, is also the most advanced in the region. It offers the three types of financial information presented in Table 1 in a comprehensive and complete manner and is frequently updated. The portal is very user-friendly and presents a large amount of simple explanatory information on basic financial management.

Guatemala . Launched in 2003, the portal represents a major effort to improve the transparency of the public sector. Although not part of a larger transparency strategy, the portal may constitute an important milestone in involving civil society in public financial monitoring. It is expected that the portal will be followed by other initiatives in the area of financial transparency. These include, among others, the inclusion of the municipality-oriented data on the portal as soon as they are incorporated into the financial management system.

The portal is updated monthly, and is directly linked to the government's financial management information system. It includes detailed information on expenditure, revenue and debt. On the expenditure side, users are able to review information according to different criteria such as spending institution, purpose and geographical location of the expenditure. This data is illustrated with graphs, making the information more user-friendly.

Overall, the portal lacks detailed information on the framework within which budget execution is exercised. The portal does not present information on the budget law nor macroeconomic data for the year. As in other portals, this makes it difficult to establish comparisons between planned and actual expenditure.

Bolivia. Bolivia's transparency portal has been set up as a means to publish data on budget implementation. The portal is under the website of the public finance modernisation project. The most important component of this project has been the development of the integrated financial management information systems from which the website takes the information. In fact, the portal is named after this system - Sistema Integrado de Gesti ón y Modernización Administrativa , SIGMA. Although there is an explanatory section on budget issues, little additional information is provided beyond data related to budget execution.

The information is well presented, comprehensive and includes past years' budgets and a large number of graphs. However, the design of the portal could be improved to be more user-friendly. A major revamping of the portal is expected in the near future. This effort will include improving the presentation of the information, and expanding its usefulness to civil society by adding functionality to the portal and enhancing the clarity of the information presented.

Colombia. Colombia's transparency portal publishes data relating exclusively to social investment. The portal includes links to several agencies with investment responsibility in this area. Within each of these agencies, the portal presents a list of investment projects for which the agency is responsible. However, the information on each of these projects is not extensive and could be increased. The portal is very rich in non-transactional information, while transactional data is limited. Among other things, the portal includes links to control agencies, such as the Comptroller and the Accountant General. Also, the portal elaborates government plans on social investment, and provides a large number of technical definitions.

Although well designed and attractive, the fact that the portal only publishes social investment may hide information on operational costs of the ministries or agencies responsible for it, therefore limiting awareness on the importance of reducing this latter cost to increase budget for actual investment.

Chile. Although Chile does not have a transparency portal as defined in Section II, the Budget Directorate's website offers a considerable amount of information on macroeconomic data, budget legislation, publications and budget execution. It also has an outstanding "Frequently Asked Questions" section with detailed information on budget issues and a "Management Control" section with information on performance indicators of institutions.

The website presents a large amount of non-transactional information, but there is limited transactional data. Budget execution is updated quarterly and presented in detailed and comprehensive reports along with graphics.

IV. Application Comparison: Information Presented

Type of financial information. Among the five websites examined, Peru's portal is the one that offers the largest amount of financial information of the three types mentioned in Table 1. Guatemala's portal, designed following many features of the Peruvian one, focuses on presenting information on budget execution. This is an important achievement, as this information is the most complex to present. Guatemala should aim to increase the amount of non-transactional information, in order to allow the user to evaluate the approved budget in relation to previous years' budgets. Chile, conversely, ranks well in this respect.

Regarding Colombia, its focus on social investment has both advantages and disadvantages. On the positive side, this approach helps to evaluate the commitment of the government to social programmes more efficiently than in the rest of the portals. However, the drawback of this approach is that running costs are not presented and, therefore, one of the most important ratios of government's efficiency - running costs to investment budget - cannot be analysed. The portal should aim to include this type of information.

User-friendly design. Regarding design, the website of the Budget Directorate in Chile stands out. It is attractive, user-friendly and includes comprehensive information, although, information on budget execution is limited. Guatemala's portal offers a high degree of customisation to the user, to some extent higher than in Peru's case. Anyone can arrange the information according to different variables, such as investment programme, type of expenditure, and location. Colombia also has a very well-designed website. It is user-friendly and contains links to institutions responsible for social investment. Peru's portal succeeds in presenting a large amount of information without making the navigation experience complicated. On the other hand, Bolivia's portal needs considerable improvement, if it is compared to the rest of the portals. Bolivia should address this issue in forthcoming years.

Source of information. In Chile, it is expected that the ongoing development of the financial management information system will help to increase the amount of highly-transactional information. It is also recommended that the portal in Colombia be linked to the public financial information system. Also, although Bolivia is the country where the financial management system has been under development for the longer period of time and it is one of the most advanced in the region, there is no direct link between the portal and the information system.

It is important to highlight that currently, there are no major barriers, either technological nor functional, to move ahead in linking transparency portals to public financial management information systems.

Governmental ownership. In Bolivia, it is the Accountant General, and not the Ministry of Finance, as in the rest of the countries, that is responsible for managing the portal. The fact that the financial information is presented in the public finance modernisation project website, and not in the institution's, indicates that there has been a limited transfer of ownership to the government. However, to be sustainable and successful, these portals need the commitment of the government. In Guatemala, Colombia, and Peru the portals have had considerable support from international organisations, but in all of them there has been transfer of ownership to the government to a greater or lesser degree.

Table 2 highlights some of the key aspects of the analysis.

Table 2.Transparency Portals: Key Comparators

	Type of Information	Design	Source of Information	Ownership
Peru	§ Large volume of non-transactional, transactional & highly transactional information	§ User-friendly	§ Linked to public financial information system	§ Linked to transparency strategy § Managed by Ministry of Finance
Guatemala	§ Large volume of highly transactional information § Limited non-transactional information	§ High degree of customisation § Large number of graphs § User-friendly	§ Linked to public financial information system	§ Managed by Ministry of Finance
Bolivia	§ Transactional	§ Large number of graphs § Could be more user-friendly	§ Not linked to public financial information system	§ Limited transfer of ownership to government
Colombia	§ Large volume of non-transactional information § Limited highly transactional information § Focus on social investment	§ User-friendly § Linked to responsible public institutions	§ Various public agencies responsible for social investment § Not linked to public financial information system	§ Managed by Ministry of Finance
Chile	§ Large volume of non-transactional information § Limited highly transactional information	§ Efficient design § User-friendly § Comprehensive	§ Expected to increase amount of up-to-date information	§ Managed by Budget Directorate

V. Enablers and Constraints

There are three main enablers that can be identified. The first one relates to the existence of good financial information systems that can provide reliable information to a certain extent. The second is the support that these systems and more recently the portals have had from multi-lateral institutions such as the World Bank and the Inter-American Development Bank. Third, government's commitment to the project has been identified as a key enabler for success.

The main constraints are the negative side of the enablers. In particular, lack of government support has made it difficult to advance in the development of these projects in some countries. In those that have failed, this aspect has been identified as a main failure factor. Lack of government support is due to two main reasons: i) limited confidence about e-government initiatives, and ii) the threat that any transparency tool may imply for government officials. In addition, the lack of updated and totally reliable data is a major constraint in the development of these portals. If the information presented is not reliable, the usefulness of the portal is minimal.

VI. Recommendations

This case summary has evaluated one of the more relevant tools for financial transparency in five Latin American countries. Overall, transparency portal use and design has been moving in the right direction, and the impact of such portals is growing as more information is becoming available. Gradually, these portals are becoming effective tools to monitor public financial administration by providing timely financial information. Media and opposition political parties are becoming frequent users of this information. During the last week of July 2003, for example, Peru's portal registered 1,512 unique visits. In Guatemala, some congressmen are frequent users of the information and several TV debates have referred to data published on the portal to highlight issues related to budget expenditure.

While these first steps are a very positive sign in enhancing transparency and making governments more accountable to society, there are still ways to go to improve them. There is no doubt that the only means for the transparency portals to succeed is to sustain and increase consumer demand. Society needs to consider them a source of valuable information to find out how governments are managing public finances. This requires an effort to consult with key sectors of society, especially those responsible for monitoring and critiquing government, such as the media and opposition parties. This exercise has been lacking in the portals thus far, and this could hamper their success as a transparency tool.

Another key element for future success is to raise civil society awareness as to the existence of these portals. Currently, there are few countries where these portals, and the financial information systems to which they relate, are known and employed to analyse public finances. Peru and Guatemala are the most advanced in this respect. There must be an effort from the government to promote these portals as a means to enhance governance and transparency. In this respect, launching the portals by organising events with civil society and media campaigns may be considered.

Most of these portals have been developed as isolated initiatives. However, it must be emphasised that experiences in countries like Peru indicate that the success of the portal is strongly related to the existence of a comprehensive transparency strategy, in which the portal serves as a central element. In this respect, improving transparency laws and creating an overall framework for transparency is crucial. Modern transparency laws limit considerably the amount of secret financial (and other) information, encouraging almost total public disclosure of government's financial transactions. Also, control agencies such as the Auditor and Comptroller General can be strengthened, becoming more autonomous and powerful.

In order to respond to the needs of citizens, the portals should be updated regularly. Portals should provide timely information regarding budget laws, regulations and budget execution. This last type of information may be the most challenging to keep updated. However, financial information systems currently in place in these countries should facilitate this effort. Publication of financial information in these portals is not keeping pace with the considerable development of the systems that record the information. This issue should be a priority in forthcoming years.

As can be seen, the involvement of government and civil society is essential to make the portals successful. Their commitment, active involvement and support for these transparency systems are crucial. In this respect, ownership of these initiatives must fall to key stakeholders, among them top officials in the executive, legislative and judicial powers, political parties and sectors of civil society such as the media and other organisations. However, this is not always the case. In many projects, these portals are built by external consultants with little or no knowledge of the stakeholders, and therefore, without consultation. This process has a serious negative impact in the development of transparency portals. The role of financiers is important to accomplish ownership of the system. Banks should brokerage between government and civil society to encourage their involvement in the initiative. In this respect, pushing forward an overall transparency strategy along with the portal should help.

It must be emphasised, nevertheless, that transparency goes far beyond the information that a government publishes online. In the long term, this an effort that needs strong political commitment, a culture of accountability and a legal framework that supports these goals. Transparency portals are just a tool for information and communication towards achieving these objectives.

The main recommendations are highlighted in Table 3.

Table 3. Main Recommendations

Key Recommendation	Actions to be taken
Increase demand	Increase value of information. Involve internal and external stakeholders in the design. Focus on how information is presented. Design user-friendly portals.
Raise awareness	Design a communication strategy. Arrange events with civil society.
Build a comprehensive transparency framework	The portal should be just one among many tools to enhance transparency. Establish a legal framework for transparency. Align objectives of different government agencies.
Keep the portal up to date	Ensure that the information contained is reliable and updated continuously.
Build government's ownership	Find political commitment for the portal. Ensure that it becomes a theme in government's agenda.

Further Information/Endnotes

i. For further information, see, for example Inter-American Development Bank, Strengthening a Systemic Framework Against Corruption for the Inter-American Development Bank , 2001. http://www.iadb.org/leg/Documents/Pdf/Corruption-EN.pdf ; FMI, Código de Buenas Prácticas de Transparencia Fiscal , 1999. http://www.imf.org/external/np/mae/mft/code/spa/code2s.pdf .

ii. Web addresses for these portals are:
Peru: http://transparencia-economica.mef.gob.pe/documento;
Guatemala: http://transparencia.minfin.gob.gt/ ;
Bolivia: http://www.sigma.gov.bo ;
Colombia: http://www.transparencia.gov.co/transparencia/;
Chile: http://www.dipres.cl/fr_presupuesto.html .

iii. For further information, see: Ministerio de Economía y Finanzas, Transparencia Económica y Fiscal , 2001 (http://transparencia-economica.mef.gob.pe/documento/doc/DT_Transparencia_RCC.pdf), and Preguntas Frecuentes sobre Transparencia Económica y Fiscal , 2002 (http://www.mef.gob.pe/preguntas_frecuentes18.php).

The findings, interpretations and conclusions expressed in this paper are entirely those of the author and should not be attributed in any manner to the World Bank, to its affiliated organisations, or to the members of its Board of Executive Directors or the countries they represent.

Case Details

Case Editor : Richard Heeks.
Author Data Sources/Role : Funding/Oversight Role.
Centrality of Transparency : Central. Type : Reporting. Audience : External. Content : Financial. Sector : Economic Services. Outcome : Partial Success/Partial Failure.
Region : South/Central America. Start Date : various. Submission Date : December 2003.