A recent paper (includes some illuminating graphical images) published by the Washington-based Institute for State Effectiveness argues that a consequence of systemic failure in national accountability may be catastrophic corruption. The paper presents a singular view of corruption by looking at the problem through a public finance lens. A “follow-the-money corruption cycle” is used to demonstrate how corruption works at each stage of the public finance management system.
Democracy is presented as a foundation for national accountability where citizens can hold government to account for its promises through the election system every few years. The paper argues that the primary national accountability mechanism that operates in the space between elections is the budget cycle. When the budget cycle is broken, national accountability is likewise. Moreover, the ability of the public finance system to learn and self-clean may be critically compromised.
Examples of such budget cycle failures are numerous. When the budget is more like an auction, without policies being subjected to a rigorous evaluation process, the whole public finance system can be jeopardised. People with power and influence, such as politicians, public officials, and business owners pay for budget allocations and allotments, pay for contracts, pay to vary a contract, pay to verify that a road was built (when it wasn’t), and pay to get paid. They pay to clear audit irregularities whether those are real or otherwise. They pay for positions in government and public corporations, pay to cover tracks in the accounting system, pay for access to lucrative government assets or for favourable treatments on debts. They bribe public officials for low assessments of tax liabilities, low valuation of goods at customs, and favourable concessions and royalty treatments in extractive industries.
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corruption, public_finance, budget_failures, national_accountability,
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