Fiscal Transparency in Mongolia Dear esteemed colleagues, My name is … and I represent the Ministry of Finance of Mongolia. I am here to briefly talk about our Country’s current developments and challenges in Fiscal transparency.
1. OVERVIEW OF FISCAL TRANSPARENCY
1.1. Vision on budget transparency Millennium development plan (CHAPTER 3 - Principles): Private sector: To carry out transparent and legal activities Government: To serve in the best interest of the public and be transparent in the operation Public: To monitor the Government operations and to be able to influence decisions Although Mongolia is a newcomer to the Global community and we have only transitioned from centralized to market economy in 1990, We are very ambitious in our efforts to become a transparent and free society. In the Millennium development plan, Government must strive to serve in the best interest of the public and must be fully transparent in their operations including finance. The information must be available and the public has to be able to monitor and influence the Government decisions. Budget transparency is essential.
1.2. Major developments in budget transparency Budget Law Introduced to ensure fiscal stability and transparency, enhance the efficiency and predictability of resource allocation, and to increase citizens participation in the budgeting process New website for Budget Transparency /iltod.gov.mn/ Improving transparency (Mid-year budget review) Budget Comics for citizens /iltod.gov.mn/ 1990-2008 2009 2010 2011 2014 2015 2016 Glass Account Law The purpose of this law is to make transparent budget management decision and processes and to create information system ("glass accounts") to enable public monitoring with the objective of efficient spending of state and local budget as well as state and local assets. Fiscal Stability law Article 5. Fiscal management principle: short and medium term fiscal policies and strategic objectives, long term trend projections, their contents and enforcement shall be transparent Open platform for Budget information iltod.gov.mn/tusuv/ Because the idea of budget transparency has only been introduced since the early 2000s, the public’s involvement in the budget has been rather slow in the beginning but it has been steadily increasing in the past 5 years as the new generations emerged and started to show more interest in the finance and government operations. Technological advances, media and other mediums such as Facebook has enabled and sparked the interest. This diagram shows the major developments in budget transparency since our transition in 1990 and reflects the public involvement. We Introduced fiscal stability law and amended our budget laws during our fiscal reform in 2011 to ensure fiscal stability and transparency, enhance the efficiency and predictability of resource allocation, and to increase citizens participation in the budgeting process. This was the first major step for introducing proper mechanisms. In 2014, we enacted the Glass accounts law to make transparent management decision and processes and to create information system ("glass accounts") to enable public monitoring with the objective of efficient spending of state and local budget as well as state and local assets. This was a big step towards increasing public awareness on budget and significant contribution to the wide range of information availability.
1.3. PFM-performance report (World Bank) Results: Fiscal and budget information is accessible to the public Mongolia has made good progress in increasing the comprehensiveness of information included in the budget Public disclosure of fiscal information has been steadily increasing The IBL initiated significant fiscal decentralization in Mongolia Recently, our fiscal system has been assessed by the World bank in the PFM performance report and the main results show tremendous improvements: Fiscal and budget information is accessible to the public; Mongolia has made good progress in increasing the comprehensiveness of information included in the budget; Public disclosure of fiscal information has been steadily increasing since 2006 and now includes the annual budget documentation at the time of submission to parliament, in-year budget execution reports, year-end financial statements, external audit reports, contract awards, and Information on resources available to primary service units; The IBL initiated significant fiscal decentralization in Mongolia and instituted rule based intergovernmental fiscal transfers which, combined with the rapid increases in government revenues, provide sub-national governments with generally predictable additional funds to deliver services.
1.3. PFM-performance report /Continued/ Indicators Score Explanation PI-6 comprehensiveness of information included in the budget (i) Share of the listed information in the budget documentation most recently issued by the central government A Recent budget documentation fulfils 7-9 of the 9 information benchmarks PI-8 Transparency of intergovernmental fiscal relations (i) Transparent and rules-based systems in the horizontal allocation B Transfers that are based on transparent and rule-based mechanism accounted for 81.2% of total transfers, or more than 50% but less than 90% of all transfers. SN governments are provided reliable information on the allocations to be transferred to them before the start of their detailed budgeting processes Fiscal information (ex-ante and ex-post) that is consistent with central government fiscal reporting is collected for 90% (by value) of SN government expenditure and consolidated into annual reports within 10 months of the end of the fiscal year. (ii) Timeliness of reliable information to SN governments on their allocations from central government (iii) Extent to which consolidated fiscal data is collected and reported for general government according to sectoral categories PI-24 Quality and timeliness of in-year budget reports (i) Scope of reports in terms of coverage and compatibility with budgetary forecasts C Comparison of the budget is possible by administrative and economic classification. Expenditure is captured at the payment stage only. Monthly reports are issued within ten days after the end of the month; quarterly reports are issued within two weeks after the end of the quarter. Manual data entry and the lack of integration between the accounting and payment systems create some concerns about the quality of the data in the reports. These data issues are not highlighted in the reports. However, this does not compromise their basic usefulness. ii) Timeliness in the presentation of reports (iii) Quality of the information We scored very high on the transparency of inter-government fiscal relations and comprehensiveness of information included in the budget.
1.4. Open Budget Index Based on internationally accepted criteria and 109 distinct indicators, Mongolia has been assessed on its budget transparency since 2006. According to OPEN BUDGET SURVEY 2015, Mongolia has a score of 51. Public Participation has been identified as the weakest area scoring a low 19. Moreover, Drawing on internationally accepted criteria developed by multilateral organizations, the Open Budget Survey uses 109 indicators to measure budget transparency. This survey has been done on Mongolia’s budget transparency since 2006 by OPEN SOCIETY FORUM. Although we had significant improvements in Budget Oversight area through policy changes and implementing transparent practices within the last 10 years, Mongolia is still lagging behind on active public participation of the budget.
1.4. Open Budget Index /Continued/ Mongolia’s score of 51 out of 100 is moderately higher than the global average score of 45. As you can see, Mongolia’s score was moderately higher than the global and regional average score of 45. This was mainly due to lack of public participation in the budget. In the last 10 years, Ministry of Finance has been making many improvements on the availability of Budget documents scoring in the range of Substantial to Extensive. We made improvements on the availibility by producing more and more documents such as executive’s budget proposal, citizens budget, mid-year review, and so on. Although we are making enough progress on the variety of documents, we have been lagging in the areas of accomodating the budget documents to public and increasing public awareness and participation. As a new comer to world Improvements: Publishing the Citizens Budget Improving the comprehensiveness of the Year-End Report Inadequate Areas: Mid-year Review Executive’s Budget Proposal
1.4. Open Budget Index /Continued/ RECOMMENDATIONS IMPROVING TRANSPARENCY 1. Mid year Review and Citizens budget 2. Comprehensiveness of the Executive’s Budget proposal 3. Comprehensiveness of performance IMPROVING PUBLIC PARTICIPATION 1. Effective mechanism 2. Legislative hearings 3. Formal mechanisms for audit IMPROVING OVERSIGHT Public meetings to review audit reports The main recommendation was to improve public participation Improving Transparency ■ Produce and publish a Mid-Year Review and a Citizens Budget for the Executive’s Budget Proposal. ■ Increase the comprehensiveness of the Executive’s Budget Proposal, for example by presenting more details on the classification of expenditures for future years and macroeconomic forecasts. ■ Increase the comprehensiveness of the Year-End Report by presenting more details on planned versus actual performance. Improving Participation ■ Establish credible and effective mechanisms (i.e., public hearings, surveys, focus groups) for capturing a range of public perspectives on budget matters. ■ Hold legislative hearings on the budgets of specific ministries, departments, and agencies at which testimony from the public is heard. ■ Establish formal mechanisms for the public to participate in audit investigations. Improving Oversight ■ In both law and practice, ensure the legislature is consulted prior to the virement of funds in the Enacted Budget and the spending of contingency funds that were not identified in the Enacted Budget. ■ Ensure the legislature holds public meetings to review Audit Reports.
2. RECENT FISCAL REFORMS IN PUBLIC PARTICIPATION
2. Recent developments for Public participation MONGOLIA HAS BEEN MAKING PROGRESS IN THE FOLLOWING AREAS: Policy measures to increase public participation on budget discussion Availability of information (Glass Accounts law) MONGOLIA HAS BEEN MAKING PROGRESS IN THE FOLLOWING AREAS: Policy measures to increase public participation on budget discussion Availability of information (Glass Accounts law)
2.1. Increasing public participation in budget discussion PUBLIC PARTICIPATION IN LOCAL BUDGET 1. Public discussion 2. Open survey and questionnaire 3. Results 4. Budget proposal 5. Approved budget Mongolia has introduced a mechanism for Public participation in the local budget in 2012. In practice, Public participation in the local budget has been steadily increasing. Government of Mongolia is planning to implement a similar process for the State budget. Ensuring community participation in the local budget process Mongolia has introduced a mechanism for Public participation in the local budget in 2012. In practice, Public participation in the local budget has been steadily increasing. Government of Mongolia is planning to implement a similar process for the State budget.
2.2. Availability of information (Glass Accounts law) To promote information accessibility and transparent budget To increase efficiency in the budget through monitoring To increase public participation and awareness of budget affairs Most recent major development in Mongolia. Under President’s initiative, Glass accounts law (Transparency) was submitted to the Parliament and was approved on July 11, 2014. The purpose of the law was To promote information accessibility and transparent budget To increase efficiency in the budget through monitoring To increase public participation and awareness of budget affairs Under President’s initiative, Glass accounts law (Transparency) was submitted to the Parliament and was approved on July 11, 2014.
2.2 Availability of information (Glass Accounts law) All budget entities, fully and partly state and locally owned bodies dedicate a separate menu in their webpages named as “GLASS ACCOUNT” : The following information is disclosed in their webpages: Annual budgets, procurement plans and local development fund plans; Semi-annual and annual budget performance; Bid documents, bid procedures, tender/bid invitations, criteria for bidders, bid amount of grants and aids, and their allocation/expenditure All budget entities, fully and partly state and locally owned bodies dedicate a separate menu in their webpages named as “GLASS ACCOUNT” : The following information is disclosed in their webpages Annual budgets, procurement plans and local development fund plans; Semi-annual and annual budget performance; Bid documents, bid procedures, tender/bid invitations, criteria for bidders, bid amount of grants and aids, and their allocation/expenditure Also there are strict sanctions for iincompliance.
3. Concluding remarks MINISTRY OF FINANCE IS DEDICATED TO IMPROVE BUDGET TRANSPARENCY AND WILL TAKE FOLLOWING ACTIONS: Carry out recommendations on budget transparency by international organizations (Such as PFM, Open budget reports etc.) Improve and implement proper mechanism for public participation in budget discussion To maintain information availability and improve the coherency and accommodation to public MINISTRY OF FINANCE IS DEDICATED TO IMPROVE BUDGET TRANSPARENCY AND WILL TAKE FOLLOWING ACTIONS: Carry out recommendations on budget transparency by international organizations (Such as PFM, Open budget reports etc.) Improve and implement proper mechanism for public participation in budget discussion To maintain information availability and improve the coherency and accommodation to public
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