Budget Credibility Across Countries: How Deviations are Affecting Spending on Social Priorities
- Paolo de Renzio, Jason Lakin, Chloe Cho
- Sep 2019
- International Budget Partnership (IBP)
- International
This paper analyzes budget credibility from the information provided in a dataset created by World Bank that includes cross country data on government spending - both as originally approved and as finally executed over the period 2009-2017. Credibility here means extent to which actual spending matches the approved budget - both in terms of overall revenue and expenditure, and in terms of the allocations and spending in specific sectors, such as health or education. It uses data from a diverse sample of 35 countries to look at both, deviations in aggregate spending and at shifts in the composition of budgets during their implementation. The evidence demonstrates that budget credibility is an important challenge for governments and can undermine countries’ efforts to live up to the commitments that they have signed as part of the UN 2030 Agenda for Sustainable Development. Key findings of this paper include:
- National budgets are underspent by 10%, on average.
- The problem is even more evident in poorer countries where budget system is weaker and reliance on external financing is greater.
- Budget deviations are much larger and negative for capital spending, etc.
