Resource
Resource dependence and budget transparency
Producer:
Antoine Heuty & Ruth Carlitz
Publication year:
2009
Source of the information:
Revenue Watch Institute
This paper analyses the results of the Open Budget Survey 2008 - an evaluation of budget transparency in 85 countries. The authors highlight a number of issues including:
- Budgets are less transparent in oil-dependent countries: poor performance of resource dependent countries is largely driven by the lack of budget transparency and accountability.
- The cost of budget opacity in resource dependent countries: implications of lack of transparency.
- Why transparency matters in resource dependent countries: lack of budget transparency is likely a direct result of the states' dependence on oil for public revenues.
Findings:
- Resource dependent countries tend to be less transparent than countries that are not resource dependent.
- Resource dependent countries register an average Open Budget Index (OBI) 2008 score of 31 out of a possible 100, compared with 45 out of 100 for non-resource dependent countries.
- Furthermore, with the exception of South Africa, none of the resource-dependent countries appear among the five top OBI performers.
- Oil-dependent countries also appear to have very poor expenditure control systems, which can allow for the mismanagement of resources.
Recommendations/Conclusions:
- An abundance of natural resources need not imply slower economic growth and poor development outcomes, a phenomenon often referred to as the 'resource curse'.
- Opening budgets can help to channel natural resource revenue towards economic and human development.
- The lack of transparency in oil producing countries underscores the need to implement the Extractive Industries Transparency Initiative.
