Oxfam’s renown blogger Duncan Green provides key data leads for the MDG debate that are not known generally.
For a long time such important aspect of the MDG debates like the size and quality of public spending could not be converted into the real data and numbers. To fill this gap, Oxfam teamed up with an NGO Development Finance international and development and came out with the new initiative to examine planned and actual spending of the governments in seven sectors, disaggregated by types (recurrent and capital), and sources of funds (government revenue or donor funding).
// Government spending watch
Working with a network of government officials, DFI has pulled together and analysed the budgets of 52 low and middle income countries (with another 34 to follow), to find out the size and quality of public spending. The findings of the project named Government Spending Watch were summarised in the report "Progress at Risk" (to be published later this year).
// GSW key findings
- Most countries have been increasing revenue and spending as a % of GDP, but this is now going into reverse
- The sources of government finances have shifted from grants to loans, including more expensive domestic borrowing, raising fears about growing debt burdens (although no new debt crisis is imminent)
- Countries with IMF programmes have raised less revenue, are cutting deficits faster and have seen less positive trends in MDG spending. Agriculture and health spending are now much higher as a percentage of GDP, and education and social protection spending are rising faster in non-IMF countries. Other MDG sector spending is stagnating compared with GDP or total spending.
- For all MDGs, the vast majority of developing countries are spending much less than they have promised or than international organisations have estimated is needed. Only one third of countries are meeting any education or health goals, and less than 30 per cent are meeting agriculture and WASH goals. Trends have been even less positive for gender and sustainable development.
- Some of the spending has been funded by rapidly growing aid – especially in education, health, WASH and agriculture. Progress in these areas is threatened as OECD aid flows are now declining in real terms, and are increasingly moving away from MDG sectors to infrastructure and growth.
- In most countries, actual spending is substantially less than the amounts announced in budgets (see table). This is particularly true in the health, agriculture and WASH sectors, reflecting delays in donor funding, and absorptive capacity problems in sector ministries and decentralised government agencies.
- Types of spending show two worrying patterns. Some sectors (WASH and agriculture) are dominated by investment, raising the need to increase recurrent spending dramatically to maintain buildings and equipment. Others (education, health and social protection) are dominated by recurrent spending on wages and supplies. Especially if donors reduce budget support, which funds much recurrent spending in many countries, governments will need to make even greater revenue efforts to maintain recurrent spending and keep delivering progress.
// Relevant studies
Overseas Development Institute (ODI) has also reviewed government expenditure and the feasibility of meeting sectoral spending targets and came to the similar findings:
- Government spending on key development sectors is falling short of spending targets in many developing countries
- Even total government expenditure would not, in most cases, be enough to meet the agreed spending targets
- A silo approach to sector financing means that development sectors compete for resources and this has the potential to undermine good public finance management