Path to sustainable public finances lies in leadership

The management of public finances in developing countries is generally hampered by deficiencies in a number of areas, including budgeting, the treasury and accounting. The focus on budget is important because fiscal policy, a key component of macroeconomic policy, is usually cast in annual frameworks of revenue and expenses.

The treasury manages government cash in order to meet its disbursement needs, whereas accountants report on the actual use of government financial and real assets. Taken together, activities in these three areas make it easier to assess the impact of government decisions on economic activity and social welfare.