1 Twinning Project “Improving data quality in public accounts”

EU TWINNING PROJECT TR 08 IB FI 02 “ Improving Data Quality in Public Accounts”

AB EŞLEŞTİRME PROJESİ “ Kamu Hesaplarında Veri Kalitesinin Artırılması”

Opening Financial Data in Turkey: transparency, accessibility and

citizen involvement

Ankara, 19 April 2012

(Activity 1.7)

2 Twinning Project “Improving data quality in public accounts”

EU TWINNING PROJECT TR 08 IB FI 02 “ Improving Data Quality in Public Accounts”

AB EŞLEŞTİRME PROJESİ “ Kamu Hesaplarında Veri Kalitesinin Artırılması”

International Guidelines for data dissemination and fiscal

transparency

Aline Pennisi (State General Budget Office / MoF Italy)

3 Twinning Project “Improving data quality in public accounts”

Public finance data reporting and access

Since the late 1990s, major efforts at the international level have been deployed to promote more effective public accountability for the way in which governments raise taxes, borrow, and spend public money.

Fiscal transparency requires providing information about past, present and future activities of government in collecting and allocating public resources and in a way that it be:

• comprehensive, reliable, timely, comparable (in time and space), understandable to the public [the fundamentals, up to now]

• easily accessible, at detailed level (raw data), re-useable …. i.e. open data [evermore necessary….]

4 Twinning Project “Improving data quality in public accounts”

Fiscal transparency: why is it deemed important?

Although there is room for debate, there is a broad consensus on the fact that fiscal transparency is relevant for: Better informed decisions (in government and outside it)

o it helps to highlight potential risks to the fiscal outlook

o it enables public debate on resource allocation

o it encourages governments to pursue sound economic policies and achieve greater financial stability

Increased accountability of policy action

o it strengthens its credibility and public understanding

o it may enhance social consensus

Increased accountability of public officials

o It makes it easier to detect (and reduce) corruption

Better access to capital markets In any case it is more and more considered a right of citizens to have access to detailed information on government's activities….

5 Twinning Project “Improving data quality in public accounts”

International Guidelines on budget transparency

Guidelines and assessments on the extent to which countries satisfy them are promoted by international organizations and civil society organizations 1) IMF Fiscal Transparency Code (since 1998, revised in

2007) http://www.imf.org/external/np/fad/trans/code.htm 2) OECD Best Practices for Budget Transparency (since 2001) http://www.oecd. org/dataoecd/33/13/1905258.pdf 3) Open Budget Initiative (since 2005) http:// www.openbudgetindex.org. 4) Open Government Partnership (OGP) on Budget

Transparency (since 2011) http://www.opengovpartnership.org/

6 Twinning Project “Improving data quality in public accounts”

Good practices on what should be reported to the public

Internationally accepted good practices require governments to publish at least eight key budget reports at various points in the budget year:

Pre-Budget Statement

Executive’s Budget Proposal

Enacted Budget

Citizens Budget

In-Year Monthly Reports

Mid-Year Review

Year-End Report

Audit Report.

7 Twinning Project “Improving data quality in public accounts”

Fundamental aspects of fiscal transparency /1

Comprehensiveness

The budget documentation, including the final accounts, and other published fiscal reports should cover all budgetary and extra-budgetary activities:

o transactions related to commercial activities of government agencies (user fees) that are not included in their budgeted revenue and expenditure;

o social security funds,

o nonmarket nonprofit institutions, financed by government transfers or earmarked revenues

o revolving funds

o tax expenditures

o contingent liabilities

o quasi-fiscal activities

The central government should also publish information on:

o the level and composition of its debt and financial assets, significant non-debt liabilities (including pension rights, guarantee exposure, and other contractual obligations), and natural resource assets.

o the fiscal position of subnational governments and the finances of public corporations.

8 Twinning Project “Improving data quality in public accounts”

Fundamental aspects of fiscal transparency /2

Reliability

Fiscal data should meet accepted data quality standards, related to definitions and classifications:

o accounting policies meet generally accepted accounting standards

o international standard classifications to be used for economic and functional descriptions (e.g. COFOG / SEC), on the side of national classifications

and related to checking the data:

o automated procedures are used to facilitate the monitoring of the accuracy of data reported by individual government sector units for internal consistency testing of each institution’s data (e.g., cross-checks). Data inconsistencies and out-of-trend values are confirmed with reporting units, and documented.

o data are assessed by checking across different sources (e.g., payables by one part of the general government are equal to receivables by another, checking independent creditor and debtor sources, and domestic bank financing records compared with banking records, etc.).

o sound techniques are in place to estimate missing data, when relevant (to deal with coverage problems).

.

9 Twinning Project “Improving data quality in public accounts”

Fundamental aspects of fiscal transparency /3

Comparability (in time and space) and timeliness

o fiscal aggregate outcomes are compared with previous forecasts and with outturns of previous years

o dissemination of advance-release calendars

o simultaneous release to all interested parties

o Monthly updates on expenditures and revenues, which show progress on implementing the budget

They should be released within four weeks of the end of each month

They should contain the amount of revenue and expenditure in each month and year-to-date

A comparison should be made with the forecast amounts of monthly revenue and expenditure for the same period. Any in-year adjustments to the original forecast should be shown separately.

A brief commentary should accompany the numerical data. If a significant divergence between actual and forecast amounts occurs, an explanation should be made.

Expenditures should be classified by major administrative units (e.g., ministry, agency), by economic and functional categories should also be presented.

Information on commitments in additional to information on payments

The reports should also contain information on the government’s borrowing activity

10 Twinning Project “Improving data quality in public accounts”

Fundamental aspects of fiscal transparency /4

Understandable to the public

The understanding of the budget process by individual citizens and non-governmental organizations should actively be promoted:

o Fiscal information should be presented in a way that facilitates policy analysis

Fiscal data should be reported on a gross basis, distinguishing revenue, expenditure, and financing

Expenditure should be classified by economic, functional, and administrative category.

o A clear and simple summary guide to the budget should be widely distributed at the time of the annual budget.

o Budget presentations and accounts contain clear statements of the government’s objectives (e.g. missions and programs) as well as a listing of the items on which money is spent (as in traditional line-item budgeting).

o Results of previous policies should also be evaluated against their stated objectives, by measuring also measure outputs and outcomes in relation to these objectives.

….. and a Citizen’s Budget should be made available (the government’s

work is highly technical, it is not sufficient to simply disclose specialized documents. Access to information means using formats to access information in a language that ordinary people can understand and appreciate)

11 Twinning Project “Improving data quality in public accounts”

Where does Turkey stand according to the major international assessments?\1

In Turkey the budget is unified, but three central institutions are involved in budget preparation, execution and internal control:

o The MoF is responsible for budget preparation, budget execution, accounting and reporting, and revenue collection.

o The State Planning Organisation (SPO), now Ministry of Development is responsible, among other duties, for preparing the public investment program and the macroeconomic framework.

o The Undersecretariat of the Treasury is responsible for debt and cash management and for exercising state ownership rights in state-owned enterprises and public banks.

12 Twinning Project “Improving data quality in public accounts”

Where does Turkey stand according to the major international assessments?\2

Open Budget Index: o Turkey’s ranking 57 over 100 in 2010

o Improved over time …

o Comparable to several neighbors, and to Italy … but lower than EU average

OBI score Turkey OBI score 2010 several countries

13 Twinning Project “Improving data quality in public accounts”

New challenges for fiscal transparency

Today, most people would agree that the new standard of public transparency is measured by the amount, significance and re-usability of data released on the web. Data on revenues and expenditures should be easily accessible, digital, re-useable from a technical and legal point of view, machine readable, ……. === open data The idea is that with “open data” the public can sort, search, and transform the information to meet their needs and answer detailed questions:

o how much of my tax money is spent on cancer research?

o how much public money is spent for schools in my region?

o how much revenue is raised by taxing fuel?

14 Twinning Project “Improving data quality in public accounts”

New challenges for fiscal transparency

Since 2009, governments are making important pronouncements on the principles for transparency and on the value of making public data widely accessible for practical applications in and out of civic life:

o the US (Obama memorandum 2009)

o the UK (http://data.gov.uk/ )

o … and many others following and launching “open data portals”

In the EU, much of the debate revolves around Directive 2003/98 for the re-use Public Sector Information http://ec.europa.eu/information_society/policy/psi/index_en.htm

Its main objective of is to establish “a minimum set of rules governing the re-use and the practical means of facilitating re-use of existing documents held by public sector bodies of the Member States”.

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Fiscal transparency and citizen’s participation in an open data perspective

Examples of Government initiatives: US Recovery Act http://www.recovery.gov/Pages/default.aspx UK COINS - the Combined On-line Information System http://hm-treasury.gov.uk/psr_coins_faqs.htm, http://hm-treasury.gov.uk/psr_coins_data.htm, http://issuu.com/hmtreasury/docs/coins_coding_presentation_july_10 UK Public spending & reporting transparency http://hm-treasury.gov.uk/psr_transparency_index.htm Italy State general budget Examples of Civil society initiatives: UK Where does my money go http://wheredoesmymoneygo.org/ UK Guardian Department expenditure over 25 thousand pounds http://www.guardian.co.uk/politics/interactive/2010/nov/19/government-data-interactive-guide EU Farm Subsidies http://farmsubsidy.org/ UK Local Council Spending http://openlylocal.com/councils/spending Italy Chamber of Deputies expenditures / LinkedOpenCamera

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16

Italy – Chamber of Deputies, representation of raw data

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• The reformed accounting and public finance law requires the publication in a usable electronic format in the MoF website of the bills and budget laws, all in-year budgetary variations and the final accounts.

Legge n. 196/2009

TITOLO II - MISURE PER LA TRASPARENZA E LA CONTROLLABILITÀ DELLA SPESA

Art. 6 (Accesso alle banche dati e pubblicità di elementi informativi)

1. Ai fini del controllo parlamentare sulla finanza pubblica, anche di settore, la Camera dei deputati e il

Senato della Repubblica hanno accesso, sulla base di apposite intese, alle banche dati delle

amministrazioni pubbliche e ad ogni altra fonte informativa gestita da soggetti pubblici rilevante ai fini

del controllo della finanza pubblica.

2. Nel sito del Ministero dell'economia e delle finanze sono pubblicati, in formato elettronico

elaborabile, i disegni di legge e le leggi di cui agli articoli 11, 21, 33 e 35 con i rispettivi

allegati.

3. I decreti di variazione al bilancio adottati in conseguenza dell'approvazione di provvedimenti

legislativi sono resi disponibili, sul sito del Ministero dell'economia e delle finanze, il giorno

successivo a quello della loro registrazione da parte della Corte dei conti.

4. Il Comitato interministeriale per la programmazione economica (CIPE) trasmette in via telematica alle

Camere le proprie delibere entro dieci giorni dalla data della registrazione da parte della Corte dei

conti ovvero, ove questa non sia prevista, entro dieci giorni dalla data della loro adozione.

Italian State Budget – requirements on data dissemination

18 Twinning Project “Improving data quality in public accounts”

Evolution of the Italian State Budget dissemination standards

Table, databases and

raw data

e.g. Budget bill (PDF -

1.2 MB)

http://www.rgs.tesoro.it/VERSIONE-

I/Servizio-s/Studi-e-do/La-spesa-d/

http://www.rgs.tesoro.it/VERSIO

NE-I/Bilancio-d/Bilancio-i/

19 Twinning Project “Improving data quality in public accounts”

Raw data and aggregate reporting standards: both are needed

The release of “raw” data is very significant in itself and it provides an opportunity for many interested parties to understand public finances and answer specific and significant questions on revenue and expenditures. However, it does not by itself make the government's finances necessarily more “scrutable”:

o It contains highly technical information, requiring detailed knowledge of variable definitions and encoding schemes

o Data files are often too large to load into widely available analysis tools such as Microsoft Excel, a common tool-of-choice for many “simple” data investigators

o It must be complemented by metadata and also by a selection of (more or less flexible) summary tables and aggregate data