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.