BUDGET TRANSPARENCY

The main challenges for greater budget transparency in resource rich countries.

What constraints transparency of oil revenues in Kazakhstan?

The main challenges for greater budget transparency in resource rich countries; what constraints transparency of oil revenues in Kazakhstan?

Abstract

Certainly, there is plenty of evidence in favour of fiscal transparency to enhance the economic and political outcomes. At the same time, there has been growing debate regarding the main determinants of weak fiscal transparency. The recent empirical studies indicates the causal effect of current election procedures, political changes, as well as natural resource abundance across developing and developed countries on fiscal transparency. However, the aim of this paper not to figure out the cornerstone reasons behind the weak budget transparency, but on the contrary to increase understanding of the key constraints on budgetary disclosure and need for greater transparency with an emphasis on resource-rich developing country such as Kazakhstan. This paper provides a systematic overview of the available literature and arguments on transparency in natural resource abundant countries. It also looks at the approach of current transparency initiatives, such as the Extractive Industries Transparency Initiative (EITI) and assessment of budget transparency across countries, the Open Budget Index (OBI).

Introduction

Transparency or clearness in resource management and budgetary allocation of funds to resources has gained a lot of attention internationally particularly in countries that possess rich resources and productive extraction based industries. The issue of transparency can be resolved by developing autonomous standards, productive and efficient policy forming capabilities, growing economy, and deducting exploitation. In order to end the curse on resources, it is necessary in countries possessing extractive resources to end the negative effects. The transparency is highly dependent upon the relationship between transparency and political shifts and required changes to bring the reformation in transparency (Woodside, C., n.d., p. 1-19).

The fiscal transparency is considered as very much important by international organizations like IMF and OECD, which is evident from publication of Codes of Good Practices on Fiscal Transparency produced by IMF and best practices for budget transparency prepared by OECD. The analysts have analysed that the lack of transparency is the primary cause of Mexican and Asian financial and economic crises. The economic sustainability and adequate control and domination are key to economic transparency for developed and developing countries. However, there are certain economic limitations faced by numerous countries, which are dealt by implementing creative accounting techniques and exercises (Jarmuzek. M., 2006, p. 1-16).

Discussion

Fiscal/Budget transparency

The definition of fiscal transparency reflects the idea that there should be an open governmental configuration and roles such as fiscal policies, goals of fiscal policy, accounts of public sector and predictions pertaining to economy. The extent of openness becomes necessary to implement the adequate level of regulation by which government is controlled and held accountable for making policies for sale of designing and implementing fiscal policy. Clearness in fiscal policy further leads to formation of better and reliable policies as compare to risky policy settings (Kopits, G., and Craig, J., 1998, ...