Well managed public finances are a prerequisite for sustainable economic growth. Most countries cannot spend beyond their means for very long: sooner or later their citizens will have to face the consequences of over-borrowing in the form of inflation or economic disruption.
SECO supports partner countries in managing public finances transparently and responsibly.
SECO’s work focuses on the following domains:
Efficient budget management
Governments should manage public budgets in a way that is transparent and sustainable. Through prudent management, they can align limited public resources with national priorities. Budgetary planning should include the risk of unforeseen expenditures or natural disasters.
Public finances are the basis for any government operation.
If a country’s taxpayers and businesses perceive the tax policy as fair and tax administration is efficient, positive effects on tax collection can be anticipated. In commodity-rich countries, for example, SECO works to improve the management of income from natural resources. Such revenue tends to fluctuate and is difficult to plan in advance.
Transparent public procurement
Governments award contracts to suppliers and purchase goods through procurement. Significant amounts of public funds flow through such systems. Competition ensures that public agencies award their contracts objectively on the basis of cost and quality considerations.
A sound bookkeeping system forms a reliable basis for budgeting and decision-making. It allows the tracking of public resources and creates a record on their use.
Internal and external auditing of the use of public funds ensures government accountability.
Autonomous local financial management
Local and regional governments are supported in managing their finances autonomously. Public investments should be well planned and executed. It is important that they remain transparent and without incurring in cost over-runs.
Responsible debt management
All debts must be recorded, managed transparently and serviced. Debt strategies for the medium term should consider the costs and risks of the various sources of funding, particularly in times of economic uncertainty.
How SECO supports partner countries
SECO offers partner countries technical assistance to strengthen their public administration and institutions. In some countries, it also provides direct financial aid through the instrument of budget support. This ensures that governments or local administrations apply sound economic-policy programmes and favour developmental spending. It also enhances partner countries’ responsibility.
SECO participates in the formulation of global efficiency and transparency standards, such as the PEFA initiative (Public Expenditure and Financial Accountability). SECO engages in dialogue with partners on their priorities and on how to implement their planned reforms. This approach ensures that public finances promote economic development.