Public Finance Management is a vital component of self-determined and sustainable development. Through a country's budget development strategies are put into practice. The transparent management of these budgets is an integral part of good governance and democratic accountability. Only then the participation of all stake-holders in the development process and the reduction of poverty are possible.

New financial instruments

To fight poverty higher aid effectiveness and ownership of partner governments are necessary. The use of new aid modalities can be one way. Budget support - which entails the transfer of funds directly to the ministry of finance of the relevant partner country - is one possible modality. Through use of financial management systems and the budget processes of the partner country ownership is directly increased.
Austria has been systematically using budget support and other aid modalities, that are implemented through partner country systems, since 2005. To prevent abuse and corruption it is vital to strengthen and enhance transparency in public finances and management in partner countries. The Austrian Development Cooperation therefore sets a strong focus on capacity development in these specific areas.

Strengthening of local administrations

Strengthening Public Finance Management is a very complex process and entails specific measures and the strengthening of control mechanisms. Not only ministries require support, but also local administrations are in need of capacity development. Additionally institutions, which work to secure democratic accountability, need to be supported and strengthened. These include parliaments, supreme audit institutions, civil society organisations and also the media. By guaranteeing their unhindered and good operation, transparency and the allocation and management of public resources to the benefit of the population can ensured.
Besides governmental and non-governmental institutions in partner countries, the Austrian Development Cooperation also supports INTOSAI, the International Organisation of Supreme Audit Institutions.