November 2004, Jim Shultz / Open Society Institute (OSI)
Many countries rich in natural resources squander their wealth, enriching a minority, while corruption and mismanagement leave the majority impoverished. Breaking that pattern is difficult.
Because of their resource wealth, such countries do not have to borrow money from multilateral lending agencies that might insist on fiscal transparency and good budget practices. The world’s leading democracies, dependent on importing oil, gas, and minerals, often have little appetite to use diplomatic pressure to demand better fiscal practices from resource-rich countries. And multinational energy companies, which depend on good relationships with host governments to allow them to continue extracting natural resources, are also unlikely to press for good economic management. Thus, a special responsibility falls on civil society in resource-rich countries. In this context, it becomes imperative for the people—the true owners of their country’s natural wealth—to push their governments toward transparency and spending that responds to public needs.
Yet such monitoring is not easy. Lack of information, the complexity of available data, and government repression all combine to leave most citizens of resource-rich countries in the dark about how much their government is earning and how it is spending that money.
Follow the Money: A Guide to Monitoring Budgets and Oil and Gas Revenues aims to help citizens overcome these obstacles by providing practical information on how to be an effective monitor of government earnings and expenditures. It summarizes the experiences of some of the most successful budget groups in the world. Representatives of these groups came together at Central European University in April 2004 to discuss what it takes to succeed in monitoring how governments manage public money. The workshop in Budapest was organized by the Open Society Institute in partnership with the Center for Policy Studies at Central European University and the International Budget Project.
Follow the Money is the first in a series of guides to be published by the Open Society Institute’s Revenue Watch program targeting different audiences—nongovernmental organizations, journalists, investors, and policymakers—in an effort to help these stakeholders promote government transparency and accountability. Ultimately, by detailing and disseminating monitoring information and strategies, Follow the Money aims to help lift the “resource curse” that impedes the development of many impoverished countries.
Public budgets are the instruments that governments use to set their priorities. Over the past decade an important global movement has emerged to give citizens and civil society a voice in budget issues. A key part of budget work is monitoring revenues from the extraction and sale of gas, oil, and minerals. In April 2004, the Open Society Institute, the International Budget Project, and the Center for Policy Studies at Central European University brought together civil society leaders working on these issues to determine how the best practices from budget work can be applied to the challenge of monitoring extractive industry revenues. This report summarizes their views and recommendations. The appendix provides a list of Internet resources for further reading and a glossary of terms related to budget monitoring and the extractive industry.
