Improving the quality of public expenditure in developing countries is essential for their economic development. It contributes to the financing of development by freeing up additional fiscal space similar to increased tax revenue mobilisation, for example. This improvement requires the identification of the factors contributing to the quality of public expenditure. 

At the end of 2017, AFD asked Ferdi to carry out a study on the identification of factors contributing to the quality of public expenditure. This study was extended in 2018, 2019 and 2020.

One of the conclusions of the study is that the way public expenditure is financed influences its efficiency: financing through the mobilisation of domestic tax revenues should be preferred to debt.

This finding supports the idea that governments tend to spend the money raised from the taxpayer more efficiently, since the taxpayer is more internally accountable and this may also influence the likelihood of re-election. Conversely, taxpayers will be more likely to contribute if they feel that their contribution is worthwhile. This creates a virtuous circle.