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The People’s Budget? Politics, Power, Popular Participation and Pro-Poor Economic Policy

Author: D Brautigam
Date: 2004
Size: 20 pages

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Summary

Technical considerations used to be paramount in the budgetary process. Now that citizen participation is valued in the economic arena, ‘people’s budgets’ have emerged. This has raised hopes that spending and revenue generation can be made ‘pro-poor’. This draft paper for a United Nations’ Expert Group Meeting on Participation of Civil Society in Fiscal Policy looks at the factors that encourage pro-poor spending, and draws on case studies from Porto Alegre, Ireland, Chile, Mauritius and Costa Rica.

This paper addresses a number of questions to analyse the link between participation and pro-poor policies: Who participates? What institutional framework is necessary for participation to be pro-poor? What role has the private sector been given in this process? There is a concern that a lack of transparency could threaten new democracies. Increases in information and greater transparency make it easier to pressure and embarrass a government that is pro-poor, and greater participation by affected social groups in policy formation is also likely to boost ownership and credibility of the process. However, does greater participation actually encourage pro-poor spending?

Results from the case studies are mixed. There are several institutional features shared by pro-poor countries: strong, democratic, left-of-centre political parties; strong, independent auditing arms and institutions that enable information about spending to be shared with the public. Specific findings are that:

Participation is of a growing interest to countries, sometimes taking new and innovative forms and often, but not always, leading to shifts towards pro-poor parties.
The role of the business sector in negotiating agreements to support pro-poor budgets may be an important part of a pro-poor spending agenda.
In Porto Alegre, spending became more pro-poor after participatory budgeting was initiated. Due to increased transparency, services for the poor as well as tax compliance increased.
Ireland had a positive experience in terms of consultation and cooperation of civil society groups, but there is little evidence that a pro-poor agenda has resulted from this.
Costa Rica and Chile did not rank well in terms of budgetary participation but their pro-poor spending was good. In Mauritius, spending was pro-poor and participation was good.

There are many measures that can be taken to encourage pro-poor macroeconomic policy, taxation and spending. Recommendations are that:

Parliaments are too often excluded from budgetary consultations out of fears of clientelism. However, active and informed debate over the budget is the central role of parliament, and exclusion weakens the institutions of representative democracy and party systems, particularly in new democracies.
Capability could be built in civil society and the media so that auditing reports can be understood. This will increase transparency.
Citizen ownership of the budget should be encouraged.
The inclusion of the business sector in the process is essential for success.
Precautions should be applied to new strategies for pro-poor spending, specifically to avoid blueprint prescriptions.
States and civil societies should be encouraged to study what is working elsewhere and adapt this information to their environment.

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Source: Bräutigam, D.A., 2004 ‘The People’s Budget? Politics, Power, Popular Participation and Pro-Poor Economic Policy’, Revised draft paper prepared for the Expert Group Meeting on Participation of Civil Society in Fiscal Policy, Division for Public Administration and Development Management, Socio-Economic Governance and Management Branch, United Nations, New York
Author: School of International Service, Washington, http://www.american.edu/sis/