Sustainable public finances

Context

German development cooperation (DC) pursues a Good Financial Governance (GFG) approach. This is based on the belief that a functional public financial system promotes economic, social and ecological development.

The approach envisages that partner countries generate additional revenue independently and structure their budgets transparently, efficiently and fairly. This allows public funds to be used for the common good and reduces poverty. It also improves the rule of law, promotes citizens’ trust in the state and increases their willingness to pay taxes.

Objective

Partner countries generate higher revenues and use public funds for the common good. The rule of law has improved, citizens have greater trust in the state and are increasingly willing to pay taxes.

Approach

The project supports the German Federal Ministry for Economic Cooperation and Development (BMZ) in helping achieve Good Financial Governance. To do so, it works in four areas:

It carries out background research and analyses, prepares status reports on selected specialist topics and processes and organises specialist events. This enables BMZ to determine German development cooperation’s position.

The project also develops and tests new practical instruments, for example to analyse gender-specific inequalities in public budgets.

It also documents impact on political communication and develops learning and exchange formats.

The International Tax Compact (ITC) is also part of the project. It acts as a network and secretariat for three international initiatives on tax and development: the Addis Tax Initiative, the Network of Tax Organisations and the Domestic Revenue Mobilisation (DRM) Innovation Fund.

The Bill & Melinda Gates Foundation and the European Union are supporting the project with financial resources.

Last update: October 2023