Local governments, who have the competencies to effectively manage public finances, can better prioritize and allocate resources for social and economic needs.
On the contrary, corrupted, inefficient, or inadequate, public financial management may result in missed opportunities for growth and financial losses, reduced total investment and quality of infrastructure, underperformance of institutions, and a pervasive institutional corruption.
Poor planning practices that include failure to link policies, planning and budgeting, may contribute negatively to government performances and may foster corruptive behaviours on public financial management. In addition, many local governments still have weak or inadequate mechanisms for citizens to monitor government’s performances on the financial field. With a poor control over expenditures and public goods, local officials may be involved in frauds, thefts and embezzlement.
In this framework, meaningful public oversight and participation in the formation of budgetary programs, as well as, making audit reports available to the public, could be beneficial to effectively restrain corruptive behaviours.
Moreover, municipalities have to ensure, through all the stages of the budgetary processes, a reliable, transparent and comprehensive record of disbursements made, in order to promote accountability and identify irregularities.