Using PETS to fight corruption

Public Expenditure Tracking Surveys cannot provide us with exact estimates of the amount of corruption, but they can still serve as a valuable tool in fighting corruption.

Why PETS do not estimate the exact amount of corruption

How PETS can be used in the fight against corruption

Characteristics of a good PETS

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Why PETS do not estimate the exact amount of corruption

A PETS does not establish how much corruption there is in a program or a sector. The presence of leakage may for example reflect that the priorities of the district administration differ from the central government policies, which may cause the district administration to spend some of the money received for, say, textbooks on the improvement of local health facilities. If the local government is better informed about the needs of the local communities, then such leakage may actually be welfare improving, even though it is not in line with the government policies. In other cases, there may be more dubious reallocation of resources within the local authorities, and there may be plain corruption, where government officials misuse public funds for private purposes.

It is extremely demanding to establish to what extent leakage reflects corruption in the system. By way of illustration, consider a district administration and the problem of reallocation. To control for reallocation within the district administration, one has to collect information on all the revenues and expenses at the district level. Alternatively, one may aim at identifying directly corrupt transactions, for example by studying the structure of contracting for school building in a given district. Such studies are not easily undertaken, and so far have not been part of any PETS. Thus a PETS cannot in itself be used to establish reliable data on corruption, only reliable data on the extent to which a government policy is implemented in accordance with policy.

In most cases, however, the fact that government rules and policies are not followed is considered a problem in itself. It may both create an atmosphere of disrespect for public laws and regulations and a lack of transparency, which are typical characteristics of an environment where corruption flourishes.

Consequently, even though PETS cannot provide us with exact estimates of corruption, it can still serve as a valuable tool in fighting corruption.

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How PETS can be used in the fight against corruption

• Identification of potential corruption zones
  
• Monitoring the fight against corruption
  
• Empowering the stakeholders

Identification of potential corruption zones
Leakage is not equivalent to corruption, but it often a good indicator of corruption. Consequently, in order to identify corruption, the identification of leakage may be a useful first step. If there is substantial leakage in program or a sector, then this should make it legitimate to pursue further studies of possible corruption.

An advantage of a PETS in identifying potential corruption zones, is that it relies on indirect evidence. This makes a PETS less politically controversial than attempts of nailing down specific cases of corruption. A PETS does not focus on the corrupt transactions in itself, but rather compares the recorded data at each level of the administrative hierarchy.

Monitoring the fight against corruption
In general, it is quite difficult to agree on how to evaluate an anti-corruption initiative, and one commonly ends up focusing on the amount of input used in an anti-corruption program. A PETS may serve as an alternative strategy, by establishing reliable (though imperfect) indicators of the general performance of the system. However, this requires careful design of PETS in line with scientific procedures, in order to establish comparable data between districts and over time.

Empowering the stakeholders
One of the main achievements of the PETSs that have been carried out so far, is that they have informed the public on their actual entitlements in a program or a sector. Client empowerment makes possible a bottom-up approach to monitoring and controlling, where the citizens can demand certain standards and challenge attempts of corruption by officials with whom they interact. This bottom-up approach is particularly important in countries where legal and financial institutions are weak and often among the most corrupt, which makes a top-down approach difficult to implement.

What PETS don't tell us about corruption
Leakage from public finances could be an indicator of corruption in the form of embezzlement. Still, there are many types of corruption which do not necessarily produce a direct leakage from the public coffers - and are consequently not caputred in a PETS. Two examples:

• A school director ensures that schoolbooks are baught from a provider from whom he receives a kickback for the award of the school book contract - often at a price above market price. Yet no leakage may appear in the PETS, although a good PETS might compare the price spent for the school books between schools and single out school units where procurement costs have been suspiciously high.
• A local government officer/politician uses control over the public purse to extort money from a school or a health unit. In order for an (entitled) tranch to be transferred to the school, someone has to bribe the local government official/politician. Again, this form of extortion/bribery is not likely to be discovered in a PETS, since no leakage occurs.

Hence, it is not advisable to conclude from a PETS which does not reveal extensive leakage, that corruption is not a problem. It still might produce poor judgement in procurement and resulting poor quality public services, it might lessen civic trust in public officials if rumours, as well as other undesirable consequences.

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Characteristics of a good PETS

Representative: The sample size must be large enough to draw conclusions about the problem at hand.

Rigorous: In many developing countries, public information systems cannot be trusted. A rigorous analytical approach, including collection of primary data, is then necessary.

Planned dissemination of results: Results from PETS may be sensitive. Efforts should be made in order to communicate the results in ways that are effective in terms of improving the system for transfer of public resources.

Building knowledge over time: A new PETS should build on previous ones (if of appropriate quality) in order to learn about time trends in key variables.