For as long as governments have existed, public financial management (PFM) has been present. PFM has always been explicitly structured around ensuring the efficiency and transparency of public expenditures, and implicitly, around meeting the needs of the governments and citizens. 

It is the combination of systems, guidelines and processes that enable governments to execute their budgets. In practical terms, it is what allows governments to ensure the operation of schools, hospitals, and other essential public services. 

Over the last few decades, PFM has evolved and the balance between explicit and implicit objectives adjusted. In the 1980s and 1990s, debt crises led many governments to a greater focus on compliance and control to maintain fiscal sustainability. Servicing debt was prioritized, while investments and social expenditures received less attention. Then, as debt issues were largely addressed by the early 2000s, countries gradually shifted their attention to outcomes, adopting performance-based budgeting and establishing delivery units. 

The COVID-19 pandemic significantly increased the demands on public finance, requiring governments to allocate unprecedented levels of expenditure toward vaccine deployment, medical equipment, hospitals, and fiscal support programmes. At the same time, public finances were strained by rising interest rates, inflation, and commodity prices. Together, these factors put governments in a tough position, as they faced the need to respond to their citizens and maintain quality services at a time when resources were increasingly scarce. 

Nearly six years after the pandemic, it’s clear that business as usual may not work for governments as citizens’ demands for service delivery continue to rise. Their ability to express their dissatisfaction through the ballot box is putting pressure on governments to allocate resources effectively translate them into tangible results.  In the past year, elections in more than 60 countries saw incumbents lose a share of votes, reflecting citizen discontent with their governments. 

With rising public expectations, governments are being called to deliver not just more, but better. Yet, aligning policies and budgets to meet these demands is not always straightforward. Tax and spending measures can sometimes pull in different directions—fuel may be both taxed and subsidized; digital inclusion is promoted, but devices face high taxes; sugary drinks may be under-taxed while health systems strain to address preventable diseases. 

Responding to these demands and addressing inconsistencies is key to strengthening the effectiveness of public finance. It requires reimagining PFM in the context of service delivery, ensuring that resources support long-term priorities like equity, resilience, and climate action. 

This means:

• Recognizing PFM as a core element of fiscal coherence. Revenue and expenditure policies gain traction only when embedded in robust systems for planning, budgeting, execution, and oversight, ensuring coherence across ministries, sectors, and all levels of government.
• Focusing on outcomes, not inputs. Traditional PFM has focused on compliance and control; reimagining PFM shifts attention toward results, service delivery, and resilience—tracking not only where money is spent, but what it achieves.
• Utilizing PFM to ensure resilience in practice. Flexible budgets, contingency financing, and transparent procurement allow governments to maintain health, education, and climate priorities in times of crisis—ensuring that immediate shocks do not derail long-term goals. 

Currently, these issues are top priorities for governments and the international community, including institutions like UNDP and the World Bank. At the recent Fourth International Conference on Financing for Development (FFD4) in Sevilla, the UNDP-led Public Finance for SDGs Collaborative [1]—a joint effort by governments and partners to reframe public finance as a driver of sustainable development—was launched. 

This initiative focuses on development outcomes and promoting fiscal policy coherence across revenue, spending, and debt. The Collaborative will engage ministries of finance, planning authorities, tax administrations, and audit institutions to move beyond fragmented initiatives and design coordinated fiscal policies that maximize impact. The World Bank is also conducting research to understand the role that bottlenecks in PFM play in service delivery—and potential solutions to address those challenges. Governments, development partners and technical experts will discuss these issues at the upcoming Reimaging Public Finance Global Conference on September 29 and 30.  

Turning public resources into effective service delivery requires collaboration among government actors at all levels. As we reimagine how public finances work for development by embedding coherence, resilience, and outcomes at the heart of public finance, coordination is ever more important: aligning resources with long-term priorities, responding to emerging challenges, and maximizing impact on people and the planet.

[1] A Sevilla Platform for Action initiative.