Transparency International’s Corruption Perception Index 2023

Introduction

On 30 January 2024, Transparency International (TI) released its Corruption Perceptions Index (CPI). The CPI 2023 evaluated and ranked 180 countries and territories based on their perceived levels of public sector corruption, utilizing a scale from 0 to 100, where 100 represents a very clean environment and 0 indicates high corruption. This assessment considered responses to corruption over the past decade and beyond, drawing insights from 13 distinct independent data sources, including expert evaluations and surveys of business individuals.

Global Overview

The global findings indicate that more than two-third of the countries scored below 50. The CPI 2023 reveals that out of the 180 countries assessed, only 28 have shown improvement in their corruption levels over the past twelve years while 34 countries have experienced significant deterioration.

Denmark with the score of 90, maintains its top position for the sixth consecutive year followed by Finland and New Zealand with the scores of 87 and 85, respectively. However, the score of New Zealand has declined from 87 in CPI 2022. On the contrary, Somalia (11), Venezuela (13), Syria (13) and South Sudan (13) remain as the lowest ranked countries. In the last decade, six countries have significantly improved while another six countries have significantly declined including the highest-ranking country like Sweden.

Bhutan’s Score and Rank

Bhutan scored 68 and ranked 26th least corrupt country among 180 countries and territories. The above score has remained consistent for the last six years. However, Bhutan’s ranking has declined after maintaining 25th position for the last two years as shown in Table 1. Nonetheless, Bhutan has consistently held the sixth position in the Asia and Pacific Region for more than a decade.

Table 1: Bhutan’s Global and Regional CPI Rank and Score from 2018-2023

The decline in Bhutan’s ranking may have been affected due to substantial improvement in the score made by Barbados, from 65 in 2022 to 69 in 2023. Some of the factors contributing to the success of the Barbados can be attributed to strong institutions, more transparent public procurement, and better anti-corruption policies and legislations. Amongst the countries and territories above Bhutan, 12 have maintained their scores including Bhutan whereas scores of nine have contracted by one or two points.

Similar to the past years, four data sources were used for constructing Bhutan’s CPI as illustrated in Table 2. Amongst the data sources, Bhutan’s score on the quality of policies and institutional arrangement towards sustainable socio-economic and political development is relatively lower as compared to other data sources.

Table 2: Data Sources for Bhutan’s CPI Score

Bhutan’s CPI Analysis by Data Sources

In-depth analysis of the four data sources is as illustrated below:

1. World Bank Country Policy & Institutional Assessment (CPIA)

The CPIA highlights Bhutan’s robust commitment to holistic development as shown in Table 3. The consistent rating on ‘Building Human Resources’ indicates Bhutan’s unwavering dedication to national policies and service delivery, particularly in health and education services. Furthermore, the indicator on ‘Equity of Public Resource Use’ highlights alignment of government expenditures with the needs of the impoverished, showcasing a strong commitment to poverty reduction priorities. ‘Macroeconomic Management’ also reflects the country’s conscious effort to ensure prudent policies in monetary, exchange rate, and aggregate demand, fostering sustainable economic growth.

However, besides the commendable strengths, the CPIA identifies areas demanding attention. The ‘Social Protection’ indicator reveals a need for enhancements in policies related to labor market regulations and strategies to mitigate the risk of poverty. Similarly, the ‘Financial Sector’ indicates vulnerabilities that necessitate comprehensive reforms in structure, policies, and regulations governing Financial Institutions (FI), which is also evident from the numerous corruption cases in the FIs. Further, consistent low scores on ‘Business Regulatory Environment’ also indicate that the legal and policy environment is not conducive for businesses in creating jobs, investing, and becoming more productive. Additionally, the rating on the ‘Efficiency of Revenue Mobilization’ signifies the need for improvement in the overall pattern of revenue collection, indicating potential weaknesses in the de facto tax structure and revenue collection from various sources.

Table 3: Bhutan’s rating on World Bank CPIA from 2018-2022

2. Global Insight Country Risk Ratings

According to the Global Insight Country Risk Ratings which uses the IHS Markit World Economic Service of the Worldwide Governance Indicators, Bhutan has achieved a commendable score in terms of ‘Political Stability and Absence of Violence’ as shown in Table 4. This manifests political stability without noticeable civil unrest marred by protest, riots and internal conflicts and terrorism thereby indicating a conducive environment for investors. The consistent good score in terms of ‘Rule of Law’ highlights a reliable judicial system impartial to investors, free from expropriation, manageable crime rates that are unlikely to disrupt seamless business operations and reliable management of contractual obligations. Similarly, the ‘Control of Corruption’ dimension also featured consistently with better scores manifesting low levels of corruption in business dealings ranging from securing major contracts to getting trivial paperwork done. Against this backdrop, the stagnant scores in these dimensions underscores the necessity to reinforce current efforts.

On the other hand, the ‘Regulatory Quality’ dimension has remained staggeringly low as compared to other dimensions. The low score can be justified as CPIA also reveals consistent low scores in terms of ‘Business Regulatory Environment’ and ‘Efficiency of revenue mobilization’.  This reiterates the need for a fundamental change in formulating and implementing business-friendly laws and policies including easing the regulatory environment to foster private sector growth and strengthening efficiency of the tax collection system. 

Table 4: Score derived from the IHS Markit World Economic Service

3. Bertelsmann Transformation Index (BTI)

The BTI depicts a comprehensive status and performance of Bhutan as shown in Table 5. Democracy dimension has increased gradually over the years wherein the ‘Stability of Democratic Institutions’ indicates a robust political framework and a stable foundation for governance. Additionally, ‘International Cooperation’ demonstrated a noteworthy increase, suggesting a proactive engagement with global affairs and a commitment to collaborative efforts. Furthermore, the ‘Rule of Law’ exhibited improvement, indicating a positive trend in legal frameworks and institutions.

Despite the positive trends in some of the indicators, there are areas of concern wherein ‘Political & Social Integration’, ‘Socio-Economic Development level’, ‘Welfare Regime’ and ‘Market Organization’ present persistent weaknesses, with indicators scoring relatively low in all years. This suggests challenges in fostering inclusive political and social cohesion, as well as in creating a competitive and well-organized market environment. The ‘Sustainability’ indicator also showed a decline in 2022, pointing to potential environmental and long-term planning challenges.

Table 5: Bhutan’s rating derived from the BTI 2006 - 2022 scores

4. Varieties of Democracy

The ‘Clean Elections’ exhibits consistency over the years, suggesting a stable and reliable electoral process, emphasizing the effectiveness of mechanisms in place to ensure clean and fair elections as depicted in Table 6. Similarly, the ‘Rule of Law’ and ‘Vertical Accountability’ exhibit steady scores, reflecting a commitment to legal principles and a balanced distribution of power. Furthermore, the ‘Public Sector Corruption’, with a consistent score across the five years, underscores the resilience in efforts to combat corruption within the public sector, indicating the concerted efforts in maintaining integrity and transparency within government institutions.

On the contrary, the ‘Access to Justice’ has slightly declined, suggesting a potential weakening of the legal framework and impediments to citizens seeking fair and timely judicial processes. Likewise, the ‘Accountability’ and ‘Transparent Law with Predictable Enforcement’ have shown marginal decreases in 2022, indicating potential vulnerabilities in the overall accountability and legal predictability landscape. These declines may raise concerns about the effectiveness of mechanisms in place to hold institutions and individuals accountable.

Table 6: Bhutan’s rating in some of the indicators of Varieties of Democracy (V.Dem V.13)

Conclusion

The CPI 2023 highlights the correlation between corruption and injustice. The prevalence of corruption persists due to systemic weaknesses in justice systems, insufficient resources of judiciary, police and other institutions, coupled with inadequate independence from governmental branches. Therefore, the CPI 2023 underscores the importance of initiatives to enhance independence, transparency and effectiveness of the justice system towards contributing to human rights and a world free of corruption. Concurrently, anti-corruption measures play a crucial role in the global pursuit of justice.

The recommendations of the CPI 2023 are as follows:

  1. Strengthen the independence of justice system;
  2. Make justice more transparent;
  3. Introduce integrity and monitoring mechanisms;
  4. Promote cooperation within the justice systems;
  5. Improve access to justice; and
  6. Expand avenues for accountability in grand corruption cases.

In line with the global findings and recommendations, in the context of Bhutan, drawing analysis from the four data sources, some of the recommendations are as follows:

  1. Strengthen policy framework on social protection measures through re-evaluation of labor market regulations and the creation of a robust safety net to proactively address poverty risks. Further, there is a need to promote inclusivity and community engagement for a more united and cohesive society;
  2. Conduct thorough review, including reforms in policies and regulations to enhance both the structure and efficiency of the financial sector. Continuous efforts in transparency, accountability, and anti-corruption measures are paramount, to prevent complacency and address any emerging challenges;
  3. Enhance business regulatory environments and trade policies to stimulate economic growth, attract investment, and promote a level playing field for businesses. Further, there is a need to bring a paradigm shift in the formulation and implementation of policies and regulations governing businesses, including easing of regulatory burden geared towards invigorating the business environment and fostering growth and innovation;
  4. Conduct comprehensive review of the tax structure and revenue collection methods to address declining trends in revenue mobilization efficiency for fiscal sustainability and support the government’s development agenda;
  5. Reinforce the legal framework and further streamline judicial processes to ensure citizens have free access to fair and timely justice. Additionally, proactive measures should be taken to bolster the accountability and transparency mechanisms to hold institutions and individuals accountable; and
  6. Promote comprehensive and collaborative approach, involving stakeholders from both the public and private sectors, to sustain and further enhance the positive trajectory in governance, ensuring a robust and resilient system that upholds the principles of transparency, accountability, and the rule of law.                                                                                                              

Source: TI CPI 2023