<

>

WHY THIS PRINCIPLE?

To ensure budgeting and financial accountability at all levels of government. Proper costing and budgeting serve to prioritise and execute investment programmes effectively. Robust financial controls bolster accountability. Governments at all levels should therefore adopt good practices in favour of budgeting and financial accountability, as defined in the OECD Principles of Budgetary Governance, such as accurately costing public investment plans, reflecting them in budget strategies and allocation processes, fitting them into a medium-term budget framework and duly considering long-term operating and maintenance costs.

To enhance transparency with citizens and other stakeholders.
Such transparency applies to all levels of government. Budgeting transparency throughout the investment cycle provides visibility to investments, clarifies recurrent budgetary implications, and strengthens public accountability. Governments should make budgetary information regarding public investments publicly available to citizens and other stakeholders in a timely and user-friendly format. Transparency with respect to local public enterprises, often recorded in separate budgets, is a critical element for a clear picture of sub-national finances.

To ensure national fiscal stability.
Bad budgeting and financial practices at the sub-national level with respect to investment can have a cascading effect on other sub-national governments and on the national government. If sub-national governments accumulate unsustainable levels of debt, they may then require (and often obtain) implicit or explicit central bailouts to prevent a default.

IN PRACTICE

• Ensure that budget transparency occurs at all levels of government
  Co-ordinate public investment decisions with medium-term budget forecasts (all levels).
  
  
• Accurately assess costs of public investment and select investments based on their value-for-money (all levels).
  
  
• Assess operations and maintenance costs of infrastructure investment and plan for future financing (all levels).
  
  
• Disclose costs and contingent liabilities for PPPs in budget documents (all levels).
  
  
• Make information regarding allocations for and spending on public investment transparent and publicly available (all levels)
  

PITFALLS TO AVOID

• To exclude contingent liabilities from budget documents, notably at the sub-national level.
  
  
• To disconnect sub-national public investment strategies from the budget procedure.

GOOD PRACTICES

‌‌‌‌	See real life examples on how countries have been putting this principle into practice. Read more

COUNTRY PROFILES

SELF ASSESSMENT QUESTIONS