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 million
The 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
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
Year
Total
Urban
Rural
Source: INEC, ECV
POVERTY
1995
34
19
56
1999
56
42
77
EXTREME POVERTY
1995
1999
12
21
4
9
23
38
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 America
Low levels of civil society participation and lack of
transparency in social expenditure figures
The 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
150.0
1500.0
100.0
1000.0
50.0
500.0
0.0
0.0
95
96
97
98
99
00
01
02
03
04***
Year
Nominal Social Expenditure
Real Social Expenditure
Nominal per capita social expenditure
Real per capita social expenditure
US Dollars
Millions of US
dollars
2000.0
The program: Social Front,
Ministry of Economics, UNICEF
Basic Social Agenda: five components
Social 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-financing
Common 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 Front
Active participation of civil society, for example: Fiscal
policy observatory and Children’s rights observatory
The program: Social Front,
Ministry of Economics, UNICEF
Technical
Assistance
Programming
Elaboration
UNICEF
Negotiation
TSSF
Information
and civil society
monitoring
Approval
Resources
Execution
Civil Society monitoring
Closing
Evaluation
and control
Information
and technical
assistance
Results: increasing social
spending
Fre Maternity
Conditional Cash transfer (BDH)
Ye ar
2,003
160.09
2,002
146.28
20.84
2,003
19.88
2,002
12.00
2,001
8.00
Millions of USD
Millions of USD
Immunization program
12.00
2,004
Ye ar
Ye ar
2,004
200.00
2,004
2,003
2,002
10.00
5.60
Millions of USD
Results: increasing social
spending
Food and nutrition program (PRADEC)
Child care program (ORI)
2,001
19.43
16.93
Year
2,002
2,002
10.00
2,001
10.00
Millions of USD
Millions of USD
Food program for elementary schools
29.65
2,004
30.65
2,003
Year
Year
25.37
2,003
16.00
2,003
29.47
2,004
25.75
2,002
2,001
17.50
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 Finance
Budgetary dialogs (2000-2004): Congress, The Social
Front, Ministry of Economics and Finance, Fiscal
Policy Observatory, UNICEF, Civil Society, Mass
media
Follow 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 policy
Improve 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.
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