Part III Assessing resources As discussed further in the following chapters, budget analysis can be carried out at varying levels of technical detail. It can therefore be adapted for different uses and with different types of actors. 9.2. POLICY AREAS RELEVANT FOR EVALUATING RESOURCES As the diagram illustrates, there are five main policy areas that are relevant for determining whether the Government is using its maximum available resources to realize ESCR. MAXIMUM AVAILABLE RESOURCES (MAR) STAR Government expenditure Monetary policy and financial regulation Debt and deficit financing Government revenue Development assistance Source: Balakrishnan, Elson, Heinz and Lusiani (2011), Maximum Available Resources and Human Rights: Analytical Report Government expenditure: Budgetary allocations reflect how different areas of spending are prioritized. The prioritization of funds to particular areas that can (potentially) support the realization of specific rights, such as the social sector (e.g. spending on education, health) and public investment (e.g. infrastructure) should be reviewed and compared to areas of spending that do not support human rights. Government revenue: Governments receive revenue from many sources, including taxation, royalties on natural resources and profits of public enterprises. Taxation is typically the most important, accountable and sustainable way by which governments mobilize domestic resources to provide public goods, social services and social protection. Development assistance: Official development assistance (ODA) is money from regional or international foreign donors (bilateral or multilateral), which can supplement the resources available to governments in low-income or middle-income countries to support the realization of ESCR. Nevertheless, ODA might come with conditions (e.g. trade liberalization, deficit reduction) that limit a government’s ability to meet its human rights obligations. Further, when ODA is provided in the form of a loan, the interest payable on that loan will affect that government’s available resources. Debt and deficit financing: When there is a budget deficit (i.e. when revenue is less than expenditure), a government will borrow or issue bonds to investors to make up the difference. Government debt may positively or negatively affect human rights, depending on what assets are built through borrowing and whether the level of debt is sustainable. The total amount that a government borrows over time is the public debt, which represents a claim on future budgets. Monetary policy and financial regulation: Monetary policy and financial regulation directly affect the available resources by influencing interest rates (e.g. affecting employment, housing) and exchange rates (e.g. affecting competitiveness in international markets and growth). Higher interest rates make credit more expensive and discourage borrowing, which slows economic activity. When the domestic currency is devalued, exports become less expensive (and, therefore, more competitive) while imports, which might include food, fuel and other basic necessities, become more expensive. The following chapters discuss how to analyse these different policy areas. Chapter 9: Evaluating resources | 99