The paper describes how a government introduced participatory budget not only engendered greater involvement of citizens and community organisations in determining priorities, but also a more transparent and accountable form of government. Further, the participatory process effectively shifted priorities in government spending. Five factors are identified as crucial to the success of such initiatives: (1) political will, (2) regionalisation of the city, in order to decentralise it, (3) Definition of transparent technical criteria for a fair allocation of resources, (4) Adaptation of the administration, so as to reduce bureaucracy and improve effectiveness, (5) Legislative involvement - city legislators must participate in the process of 'direct democracy'. It is argued that participatory budgeting can create new ways of thinking, educate, and lead to cultural changes. It demands a decentralised form of governance, creating a direct relationship between key government staff and the community. Based on the recognition of a citizen's rights to information and to make demands on the State, state agencies have to consider the feasibility of any request and either demonstrate that its feasible or, if not, why this is so. At the same time the State invests in projects which are needed by the organised communities and which are their priorities. The spread and scaling up of the participatory process depends on the number of public works that are chosen by citizens - the more cases of direct control over government spending, the more the people trust the participatory budget and thus the greater the number of people who participate in it the following year.