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Don’t Let Cash Slip Away: How to Build Strong Government Oversight of Stimulus Spending

Que no se escape el dinero: Cómo construir mecanismos de supervisión de los paquetes de estímulos

money from around the world
Mia Katan|

This blog is the first in a short series that looks at the four core ingredients for strong government oversight of stimulus spending. Read the second blog here and the third blog here.

 

Around the world, governments are implementing massive stimulus packages to protect individuals’ economic and physical wellbeing in the midst of the pandemic. Robust oversight mechanisms are essential to ensure these huge social programs reach intended recipients. However, many governments are struggling to effectively monitor their complex and evolving stimulus programs. 

To better understand how governments can establish strong oversight of stimulus spending, I conducted an in-depth analysis of nine countries and the European Union1. I identified four key ingredients for an effective system of oversight, which we’ll explore in this blog series:

  • Multiple intertwined institutions that add up to a ‘system of oversight’
  • Strong and broad legal (de jure) mandates encompassing compliance, efficacy, and equity
  • Strong ‘actual’ (de facto) capacity, powers, and independence to carry out their mandate
  • Strong elements of public participation and disclosure, including transparency of the mechanism itself as well as the content under review

Stepping back a minute from where governments should be, current oversight of stimulus spending broadly falls into two categories. The first is top-down or independent government accountability mechanisms, such as parliamentary committees and audit institutions, and the second is bottom-up civil society efforts. Yet neither of these approaches are capable of single-handedly monitoring the trillions of dollars of government stimulus spending.

There are many examples of civil society stepping up to ‘follow the money’ and hold governments accountable. For example, the civil society organization (CSO) Indonesia People’s Struggle runs a complaint center to ensure emergency cash and food transfers reach vulnerable community members. However, civil society accountability efforts are most effective when government oversight mechanisms respond to and amplify CSOs’ concerns. At the end of the day, governments ultimately possess the authority and resources necessary to investigate and rectify stimulus spending issues.

Formal oversight mechanisms are important because they can access corners of government where CSOs often cannot reach.

  • Investigative powers: Government institutions can leverage their authority to access documents, data, and people. 
  • Prosecutorial and legislative powers: They also come with an array of powers, from the ability to prosecute to the ability to budget authority. 
  • Limits on executive power: Many governments have responded to the pandemic by declaring a state of emergency and concentrating power in the executive branch. Empowering institutions to conduct formal oversight of stimulus spending reinforces the central role of accountability between different parts of democratic governments. 

The most common government mechanisms for stimulus oversight are parliamentary committees, supreme audit institutions, and federal prosecutors. Several countries have special appointments, such as the United States’ Pandemic Response Accountability Committee (PRAC) or other investigatory bodies, such as Nigeria’s Corruption Commission.

 

A System of Oversight

Civil society’s unique strengths and strategic engagement with government offers important contributions to oversight efforts.

  • Supplementary: CSOs can independently supplement government efforts to oversee massive social spending and programming. They often benefit from a first-hand view of impacts ‘on-the-ground’, as demonstrated by G-Watch’s monitoring of emergency cash transfers in the Philippines
  • Complementary: CSOs can partner with government institutions to complement their oversight efforts. In Paraguay and Colombia, the government publishes emergency contracts as open data that civil society monitors, including by tracking price differences for COVID-19 supplies.
  • Adversarial: CSOs can also adopt an adversarial relationship with governments, in which each holds the other accountable. The Budget Justice Coalition’s advocacy in South Africa demonstrates how civil society can pressure government to uphold transparency and accountability standards in times of crisis.

Accountability is strongest when there is a constellation of civil society actors engaging with multiple government oversight bodies. For example, the United States Treasury Department’s Small Business Administration received more than 5,000 Freedom of Information Act requests from media and civil society to release loan data from the Paycheck Protection Program. Journalists have scoured the data and highlighted irregularities, which are now under investigation by the COVID-19 Congressional Oversight Commission.

This series dives into the four core ingredients for strong government oversight of stimulus spending. Robust formal institutions, in turn, reinforce civil society monitoring efforts to create a comprehensive system of oversight.

 

1Countries included in the review were: The United States, Canada, South Africa, Nigeria, Indonesia, The Philippines, Mexico, Brazil, and New Zealand in addition to the European Union. It is important to note that all nine countries are either middle or high income and therefore any conclusions have limited generalizability. Email research@opengovpartnership.gov for the database.

Featured Image Credit: Ethan McArthur via Unsplash

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