Published On: Fri, Dec 2nd, 2016

Zimbabwe government lacks fiscal transparency

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Simon Munyoro

THE 2016 Fiscal Transparency Report on Zimbabwe has exposed deficiencies in the country’s revenue sources and expenditure.

 Fiscal transparency refers to the publication of high quality information on how governments raise taxes, borrow, spend, invest, and manage public assets and liabilities.

The report which was compiled by the United States of America’s Department of State during the review period of January 1 – December 31,2015, established that Zimbabwe’s executive budget proposals were publicly available, but the enacted budget and end of year reports were not. It states that the country’s budget documents did not include a substantially complete picture of revenue streams, including natural resource revenues.

The information contained in the budget documents has not always been reliable, though the government passed and publicised supplementary budgets during the review period. Concerns were raised on that the central intelligence organisation budget was not incorporated into the public budget and there were no procedures in place to permit the parliamentary review of the intelligence budget.

It noted that, despite the fact that the, Auditor General which is the supreme audit institution audited the government’s annual financial statements, audit information and oversight for presidential expenditures were insufficient. The reports were not publicly available within a reasonable period of time.

While the process and criteria by which the government awards natural resource contracts or licenses were specified in law, processes followed in practice appear to have been broadly consistent with the law, except in the diamond sector, where there have been concerns about the transparency of the application of the criteria for awards.

According to the report, basic information about mining concessions has not been publicly available. It suggests that  Zimbabwe’s fiscal transparency would be improved by adopting  a host of measures which include, publishing the enacted budget and end-of-year reports; detailing more fully its revenues and expenditures, revenue from state-owned enterprises and natural resources; allowing greater parliamentary oversight over the central intelligence budget; and making supreme audit institution reports of the government’s entire executed budget publicly available within a reasonable period of time.

The report suggests, Zimbabwe’s fiscal transparency would also be improved by ensuring that laws and regulations governing natural resource extraction, contracting and licensing are followed in practice, and making basic information about awards the publicly available.

While a lack of fiscal transparency can be an enabling factor for corruption, the report does not assess corruption. A finding that a government “does not meet the minimum requirements of fiscal transparency” does not necessarily mean there is significant corruption in the government. A finding that a government “meets the minimum requirements of fiscal transparency” does not necessarily reflect a low level of corruption.

For the purpose of the report, the minimum requirements of fiscal transparency include having key budget documents that are publicly available, substantially complete, and generally reliable. The review includes an assessment of the transparency of processes for awarding government contracts and licenses for natural resource extraction. Fiscal transparency is a critical element of effective public financial management, helps in building market confidence and underpins economic sustainability.

It also fosters greater government accountability by providing a window into government budgets for citizens, helping them to hold their leadership accountable, and facilitating better-informed public debates.

It assesses whether governments meet minimum requirements of fiscal transparency. For the qualification of ‘publicly available’, budget documents should be disseminated within a reasonable period of time. A “reasonable period of time” generally corresponds to at least one month before the start of the fiscal year and before budget approval by the legislature for the executive budget proposal, within three months of enactment for the enacted budget, and within 18 months of the end of the fiscal year for the end-of-year report. Information on government debt obligations should be publicly available.

Reliable budget documents and related data are considered reliable if the information contained therein is credible, meaning that actual government revenues and expenditures correspond to the enacted budget. Significant departures from planned receipts and expenditures should be explained in supplementary budget documents and publicly disclosed in a timely manner. Financial statements should be prepared according to internationally accepted principles that yield consistent and comparable statements.