Chronic budget credibility challenges can undermine efforts to prioritize spending for development goals. Underspent budgets can leave sectors and programs starved of resources, overspent budgets can result in high deficits and debt crises. Shifts across sectors and ministries undermine the priorities set out by the legislature in the annual budget and can result in some sectors being deprioritized during budget implementation. Previous research from IBP has shown that government underspending on budgets tends to disproportionately impact social sectors. For example, research from the World Bank and WHO has shown that health budgets are regularly reduced and deprioritized during budget implementation.
Many countries can ill afford to lose resources to support goals around poverty reduction, child welfare, and other issues. Gains made on goals such as SDG 1 on Poverty up until 2019 were reversed because of the COVID pandemic, which led to increases in extreme poverty rates, reductions in gender equity, and a reversal of progress toward quality education, among other setbacks. Rising inflation and disruptions in global supply chains for food, fertilizer, and fuel, will also disproportionately impact vulnerable groups.
Achieving the SDGs will require governments to mobilize additional financing and prioritize budget allocations toward the SDGs, while also ensuring that the funding committed to these sectors is spent to achieve these goals. In addition, governments and development partners may also need to analyze and assess the extent of budget credibility challenges and their impact on efforts to achieve the SDGs.