Why Budget Work

Government budgets are at the core of development. It is the government’s most powerful economic tool to meet the needs of its people, especially those who are poor and marginalized. Whether you are interested in health, education, the environment, or pensions, the most well-meaning public policy has little impact on poverty until it is matched with sufficient public resources to ensure its effective implementation.

There is a growing body of evidence showing that, when ordinary people have access to budget information, coupled with the skills and opportunities to participate in the budget process, the resulting engagement between government and citizens can lead to substantive improvements in governance and service delivery.

Impact of Public Budgets on People’s Lives

why budget work

Public budgets translate a government’s policies, political commitments, and goals into decisions on how much revenue to raise, how it plans to raise it, and how to use these funds to meet the country’s competing needs, from bolstering security to improving health care to alleviating poverty.

While a government’s budget directly or indirectly affects the lives of every one of its citizens, it can have the greatest impact on the well-being and prospects of certain groups, such as the elderly, children, the poor, rural residents, and minorities. Budget cuts tend to have the greatest impact on programs that benefit the poor and vulnerable, While items like the interest owed on government debt, wages for public employees, or military expenditures are more likely to have first claim on scarce funds.

Moreover, even when funds have been allocated to specific programs—whether for minorities, children, or the disabled—poor management and misuse can keep these funds from reaching the intended beneficiaries. Marginalized people lack political power, so it is hard for them to hold their government to account—another factor in poor budget execution (i.e., after the budget is passed, how money is actually raised and spent).

Photo credit: Flickr/Vicki Francis, DFID