Increasing transparency and social expenditure in public budgets Iván Fernández Espinoza Technical Secretary of the Social Front Quito-Ecuador.

Increasing transparency and social expenditure in public budgets

Iván Fernández Espinoza

Technical Secretary of the Social Front

Quito-Ecuador

Overview

Context and Background Some economic and social indicators Evolution of social spending 1995-2004

The program: Technical Secretariat of the Social Front-Ministry of Economics and Finance-UNICEF

Results of the program

Challenges: Social Spending, Transparency and Human Rights

Context and Background: economic indicators

Ecuador is located in Western South America, bordering the Pacific Ocean of the Equator, between Colombia and Peru. It has around 13 million inhabitants and the economically active population is about 5 millionThe GDP per capita of 2002 was 1,706 USD, which locates Ecuador among the least developed in the region The country has experienced various crisis. The last one in 1999, characterized by high and increasing inflation, a drop in production, worsening of external accounts, fiscal and financial crisis

Context and Background: social indicators

Year 1995 1999 1995 1999Total 34 56 12 21Urban 19 42 4 9Rural 56 77 23 38Source: INEC, ECV

POVERTY EXTREME POVERTY

Negative impact on the social sector

High levels of unemployment and undermeployment: 16% and 60% in 2000, respectively, around 10% and 50% in 2003, respectively.

Inequality, poverty and exclusion

Evolution of overall social spending 1995-2004

Downward trajectory of social expenditure between the 1980’s and the 1990’s. Low investment in priority social programs. Poor administration of social sector’s resources. Cyclical expenditure. Social expenditure among the lowest in Latin AmericaLow levels of civil society participation and lack of transparency in social expenditure figuresThe trend has been reversed during the previous years, with an increase of public social expenditure (education, health, welfare, employment and housing) and an increase in social programs’ investment.

Evolution of overall social spending 1995-2004

Evolution of Nominal, Real and Per capita Social Expenditure

0.0

500.0

1000.0

1500.0

2000.0

95 96 97 98 99 00 01 02 03 04***

Year

Mill

ion

s o

f U

S

do

llars

0.0

50.0

100.0

150.0

US

Do

llars

Nominal Social Expenditure Real Social Expenditure

Nominal per capita social expenditure Real per capita social expenditure

The program: Social Front, Ministry of Economics, UNICEF

Basic Social Agenda: five componentsSocial support network Conditional cash transfer (Bono de Desarrollo Humano) Subsidies: food and nutrition provided by social programs

Programs targeted towards vulnerable population Children development fund

Plans for provision of universal services (education and health)Plans for job creation and micro-financingCommon component: protection of social expenditure, expenditure targeting and impact evaluation

The program: Social Front, Ministry of Economics, UNICEF

Ecuador has started a process of public social expenditure transparency: Budget formulation Expenditure follow-up Expenditure evaluation

Strategic alliances had been formed: Ministry of Economics and Finance, UNICEF, The Social FrontActive participation of civil society, for example: Fiscal policy observatory and Children’s rights observatory

The program: Social Front, Ministry of Economics, UNICEF

Elaboration Negotiation

ApprovalUNICEF TSSF

Execution

Evaluation and control

Closing

Programming

Technical Assistance

Information and technical assistance

Civil Society monitoring

Information and civil society monitoring

Resources

Results: increasing social spending

Conditional Cash transfer (BDH)

146.28

160.09

200.00

2,002

2,003

2,004

Year

Millions of USD

Fre Maternity

8.00

12.00

19.88

20.84

2,001

2,002

2,003

2,004

Year

Millions of USD

Immunization program

5.60

10.00

12.00

2,002

2,003

2,004

Year

Millions of USD

Results: increasing social spending

Child care program (ORI)

16.93

19.43

25.37

29.47

2,001

2,002

2,003

2,004

Ye

ar

Millions of USD

Food and nutrition program (PRADEC)

10.00

10.00

16.00

2,001

2,002

2,003

Ye

ar

Millions of USD

Food program for elementary schools

17.50

25.75

30.65

29.65

2,001

2,002

2,003

2,004

Ye

ar

Millions of USD

Results: increasing transparency

Social Front Minister’s Council: Budgetary discussions and definition of a negotiation strategy with the Ministry of Economics and FinanceBudgetary dialogs (2000-2004): Congress, The Social Front, Ministry of Economics and Finance, Fiscal Policy Observatory, UNICEF, Civil Society, Mass mediaFollow up and monitoring of Social Expenditure: quarterly monitoring of overall social expenditure and priority social programs. The Social Front, UNICEF, Fiscal Policy Observatory.

Results: increasing transparency

Information flow: Social expenditure module. Coordination with the Ministry of Economics and Finance, Ecuador’s Central Bank, UNICEF and the Social Front. Information with institutional, geographic and administrative-unit

disaggregating Information that has been verified at three levels and spread out

through periodic publications Civil society informed and interested about social expenditure

Technical assistance processes (Technical Secretariat of the Social Front and UNICEF) have strengthened institutional capacities: Ministries and Congress.

Challenges

Integration of economic and social policyImprove the amount and quality of social expenditure Quantity: International standards. Reduce cyclical variations in

social expenditure Quality: coverage goals and services provided, priority social

programs focalization

Budgets should be understood as a shared responsibility between the government and civil society Strengthening of information culture Public expenditure as a way to reduce poverty, inequality and to guarantee human rights.