Open Budgets: The Political Economy of Transparency, Participation, and Accountability

6. Guatemala: Limited Advances within Advancing Limits

Guatemala: Limited Advances within Advancing Limits aaron schneider and annabella españa-najéra The Guatemalan state mobilizes few resources, spends its meager revenues poorly, and provides only limited transparency and participation in budgeting . In raising barely more than 10 percent of gross domestic product (GDP) in revenues, the Guatemalan government secures only enough funding to cover basic functions, leaving the state vulnerable to crises, of which there are many of a natural , man-made, and purely political variety. The weak state administration is subsequently unable to protect itself from multiple, competing, and sometimes illicit actors who insert themselves into Guatemalan policymaking, complicating the budget process in ways that distort it from serving the public good. In sum, the state is unable to call on the resources of society to build capacity, is unable to use budgeting to direct public resources in an effective, efficient, and equitable manner, and can do little to stimulate growth or development. As a result, Guatemala remains in a vicious cycle of fiscal weakness, unaccountable budgets, and poor outcomes. Parallel to this bleak scenario, however, the transparency of government accounts and their openness to public participation have improved notably. Guatemala scored the highest among Central American countries, at fifty out of 100, on the 2010 Open Budget Index (OBI) ranking, having climbed from a score of forty-six in 2006 and a brief fall to forty-five in 2008.1 According to the terminology of the International Budget Partnership (IBP), which conducts the OBI survey, these scores “show that the government provides the public 158 6 1. Available at http://internationalbudget.org/what-we-do/open-budget-survey/rankings-key-findings/ rankings/. 06-2337-0 CH 6:PWW 2284-7 3/14/13 2:57 PM Page 158 with some information on the central government’s budget and financial activities during the course of the budget year.” “Some” information is lower than “extensive” or “significant” but better than “minimal” or “scant or no” information . Conversations with policymakers and observers of Guatemalan budgeting identified major advances in the legal and institutional architecture of budgeting over the last two decades. Five markers of change stood out, including the 1992 Law of Government Contracts, the 1997 Organic Budget Law, the 1998 introduction of an information technology system for tracking government accounts (followed by the 2003 application of information technology to government purchases), the 2002 Law of the Comptroller, and the 2008 Information Access Law. Each of these changes was an important reform to the institutional incentives and constraints facing political actors during the budget process. The simultaneous appearance of ongoing shortcomings in public finance alongside major moments of improvement presents a puzzle. How is it possible for a troubled country to take occasional legal and institutional steps to improve transparency? What was the immediate context of these changes, and are these moments of change aggregating to any kind of qualitative shift in budgeting? What have been the impacts of these changes, and what are their ongoing failures with regard to transparency and participation? Why have existing patterns of corruption and misuse of public funds persisted or returned despite these reforms, and why are they more prevalent in some areas of public activity than others? This chapter seeks to provide a reasonable explanation for the apparent puzzle of Guatemalan budgeting: limited advances within advancing limits. Important legal and institutional steps to improve budgeting have opened potential opportunities for greater transparency and participation. However, actual practice has improved in only a limited way. There are major shortcomings in the implementation of legal and institutional changes, and powerful actors continue to find ways to subvert the process. The results of the analysis suggest the need for a new approach to budget reform in Guatemala, as legal and institutional advances appear unable to alter the underlying structural conditions that limit actual practices of transparency and participation. This confirms the need for a broader political economy approach to budgeting in Guatemala (and elsewhere). Economic and political structures rooted in inequality and exclusion make weak complements for transparency and participation. Without a more cohesive coalition around an equitable and inclusive state, improvements to the legal and institutional architecture will do little to change the way powerful actors operate within Guatemalan budgeting. Guatemala 159 06-2337-0 CH 6:PWW 2284-7 3/14/13 2:57 PM Page 159 Budgeting and Budget Transparency in Guatemala The formal budget process in Guatemala follows...