Public Financial Management and Economic Sustainability

Abstract

Public financial management is a fundamental component of effective governance and economic sustainability because it determines how governments mobilize revenue, allocate public resources, control expenditure, manage debt, execute budgets, and report financial outcomes. This article examines the relationship between public financial management and sustainable economic development, emphasizing that transparent, accountable, and efficient fiscal institutions enable governments to maintain macroeconomic stability while financing essential public services and long-term development priorities. Strong public financial management systems improve fiscal discipline, align budgetary allocations with national objectives, reduce the misuse of public funds, and strengthen public confidence in government institutions. Weak systems, by contrast, can produce persistent budget deficits, uncontrolled borrowing, wasteful expenditure, corruption, inadequate service delivery, and increasing vulnerability to economic shocks. The article evaluates the major dimensions of public financial management, including revenue administration, budget preparation, expenditure prioritization, public procurement, debt management, financial reporting, internal controls, auditing, and legislative oversight. Effective revenue mobilization provides governments with the fiscal capacity to finance education, healthcare, infrastructure, and environmental protection, social security, and poverty-reduction programs without excessive dependence on borrowing. A fair and efficient taxation system also supports economic sustainability by broadening the revenue base, improving voluntary compliance, reducing tax evasion, and distributing fiscal responsibilities more equitably.