Public Finance & Economic Governance

Following civil war, economic recovery and building a durable peace requires that a state have the ability to collect and soundly manage public resources. To undertake these tasks, the state must be seen as legitimate, yet simultaneously, to secure this legitimacy the state must allocate resources and manage expenditures effectively.1 .In post-conflict settings, governments often lack the legitimacy, resources, and capacity to address the enormous challenges at hand, which require balancing, prioritizing and sequencing imperatives of peace, economic development, and human security. This is made all the more difficult in contexts where the international community is not able to coordinate and/or integrate programs on peace, aid, and development. In such circumstances, different international agencies may propose overlapping or competing strategic requirements to fragile new governments.

Despite the recognized importance of public finance and good economic governance in establishing confidence in the state, there is surprisingly little research on the specific demands and requirements of post-conflict contexts. Research that does exist tends to focus on the technical dimensions rather than the political, economic and social issues at play2, which interact with and impact issues of public finance and economic governance. An awareness of this is vital to ensure that these central functions of government contribute rather than undermine peacebuilding and economic recovery.

This section focuses attention on the ability of a state to collect, allocate and manage resources in a manner that serves society as a whole, with attention to wider issues of how this economic governance helps to ensure a sustainable peace. In order to do this, it begins by considering key concepts surrounding these issues. Here, terminology pertaining to the public sector, including that used in public finance and public financial management, economic governance, and macroeconomic policy, are presented and distinguished from one another. It then offers an overview of the seminal role of public finance and economic governance to build peace. This is followed by an articulation of the main actors involved in this domain, as well as a review of central activities undertaken. Lastly, this section presents several of the major areas of contestation, and challenges to implementation are articulated.

1. James K. Boyce and Madalene O'Donnell, "Peace and the Public Purse: An Introduction," in Peace and the Public Purse: Economic Policies for Postwar Statebuilding," ed. James K. Boyce and Madalene O'Donnell (Boulder: Lynne Rienner Publishers, Inc., 2007), 1.
2. Center on International Cooperation (CIC), Public Finance in Post-conflict Statebuilding: Executive Summary, New York: CIC, 2.

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