Local resource mobilisation

A functioning state requires a functioning system of public finances

Own revenues are the most important financial source for developing countries in the implementation of the 2030 Agenda for Sustainable Development. They allow predictable planning, independent implementation of national policies (transformation to sustainable development) and independence from external aid.

Taxes form the basis for every state to finance its functions. Therefore, the design of the tax system also plays a key role in combating poverty and growing inequality. The increased mobilisation of own revenues - i.e., taxes, customs duties and levies - in developing and emerging countries, as well as their effective allocation and use, is an essential component of development financing. In addition, good fiscal policies and efficient use of resources are indispensable for growth and the promotion of equal opportunities. Both contribute to improving the framework conditions for private sector engagement and increasing the scope for additional tax revenues in the medium term. Transparent public procurement systems can significantly reduce the costs of public projects. If public investments in infrastructure are better controlled, managed and implemented, important resources may be saved. Transparency, control and integrity also play an important role, e.g., by promoting audit offices and parliamentary committees.

The Federal Republic of Germany has an efficient system of public finances, which has contributed significantly to growth and the promotion of equal opportunities for decades. It comprises several elements: An efficient revenue system ensures that tax revenues are generated through tax and customs revenues and that suitable framework conditions for economic growth are shaped. A transparent budget system ensures that scarce state resources are used effectively and benefit the population to the greatest extent possible. The Federal Court of Auditors is the external financial control body, independent of the government, which audits the accounts as well as the efficiency and compliance of the federal government's budgetary and economic management. Effective and accountable institutions also exist at the local level to ensure successful policy implementation. Comprehensive fiscal equalisation systems assist in establishing equal living conditions across the federal territory and autonomous revenue and expenditure policies are implemented at the decentralised level through the transfer of fiscal powers.

Cooperation can facilitate the mobilisation and management of domestic resources through capacity building and exchange of good practices, for example through reform of tax administration and collection to mobilise domestic revenue at national and local levels.

Within the framework of its expert network, the Governance Fund provides opportunities to share experiences on fiscal management matters to enhance the transformation of sustainable development. The Governance Fund's support services encompass moderated exchanges of expertise and experience, short-term assignments of decision-makers and experts in the partner country, study trips to Germany and workshops.