Government Spending Watch

7005596253_ef4760369f_nAs the world’s eyes increasingly turn to the post-2015 development agenda, what has become of the Millennium Development Goals (MDGs), which have guided so much development policy over the last decade and a half? A new report co-written by Development Finance International and Oxfam, the Government Spending Watch report, has just been launched to examine how much developing country governments are spending on achieving the MDGs. Unbelievably, this is the first comprehensive attempt to compile and analyse this crucial spending data. The report uses budget data from 52 countries and examines how much is being directed towards key areas such as health, education and agriculture. Needless to say, the picture is mixed and a little messy. Sub-standard or non-existent data (particularly at a regional or local scale), gaps in donor reporting of aid and other issues complicate matters, but some trends are clearly discernible:

  • Most poor countries lost a lot of revenue due to the global economic crisis, but have grown fast since 2010, and increased revenue efforts.
  • In 2009, countries increased their budget deficits to combat the recession: since then they have cut them, but deficits will be essential to reach the MDGs.
  • Spending rose sharply in 2009, but has stagnated since then for countries with IMF programmes, and will fall in 2013.
  • Grants came too little, too late, so countries resorted to expensive loans.
  • Expensive domestic and external borrowing and public-private financing partnerships are increasing risks of unsustainable debt levels.
  • Rather than cutting spending due to worries about rising debt, the international community must provide more cheap finance using innovative mechanisms.

The overall message, then, is that the progress on MDGs is under threat and the gains made may be lost unless governments – whether in high-, medium- or low-income countries – redouble their efforts and commit the necessary resources. Of particular concern, is the fact that there are no spending targets for environmental issues, especially climate change. Most countries analysed in the report spend 0.3% or less of GDP on these issues. At the launch of the report at London’s Overseas Development Institute there was general agreement that the report’s findings would allow activists and NGOs to undertake evidence-based advocacy. It is also an important tool for governments in low- and middle-income countries, many of whom are in the dark about actual spending levels in their own country.