Improved budgeting and financial management as a tool for enhancing the performance of local government in developing countries

Rapid economic and social changes in developing countries are impacting on their governments' ability to manage those changes, and local governments in these countries are becoming the core of decentralization experiments. This article examines the problems local governments face in meeting the challenges of rapid transformation and change. This paper suggests that budgeting be used as a means for strengthening local governments' abilities to deal with such changes. Until now, budgeting has not been used as a key intervention tool for strengthening local governments. A working model to assess the state of financial and related management conditions of local governments is provided. This model can serve as a useful point of reference for change agents involved in the strengthening of local governments.