"Spending Smarter: How Efficient Public Budgets Can Drive Sustainable Economic Growth"

The World Bank’s Spending Smarter report argues that governments can drive stronger, more inclusive growth by improving the efficiency and allocation of public spending rather than simply increasing it. It urges nations to adopt transparent, data-driven, and digitally enabled fiscal management to do more with less and achieve better outcomes.

Produced by the World Bank, in collaboration with the International Monetary Fund, the Global Public Finance Initiative, and the Center for Global Development, Spending Smarter delivers a persuasive argument for fiscal reform in an age of debt and uncertainty. The report insists that what drives prosperity is not how much governments spend but how wisely they do it. Public expenditure now accounts for nearly a third of global GDP, yet inefficiency, poor targeting, and weak oversight continue to blunt its impact. The authors contend that smarter spending, anchored in transparency, technology, and measurable outcomes, could unlock immense economic potential without adding to the debt burden.

The Cost of Inefficiency

Governments everywhere are feeling the squeeze. The pandemic, inflation, and mounting social pressures have left budgets stretched thin, while citizens demand better services. Spending Smarter reveals that up to one-third of global public spending is inefficient, wasted through poor project planning, cost overruns, and duplication. Infrastructure offers a vivid example: trillions are poured into new roads, bridges, and power grids each year, yet as much as 40 percent of their value is lost due to design flaws, corruption, or lack of maintenance. The same pattern appears in education and health systems, where rising expenditures have failed to produce commensurate improvements. For the World Bank’s economists, inefficiency isn’t just waste, it’s a missed opportunity to reduce poverty, expand jobs, and fuel long-term growth.

Doing More with Less

The report’s optimism lies in the evidence that efficiency pays off. By reallocating even a small fraction of wasted spending toward productive sectors, countries could achieve significant and sustained growth. The Bank’s modeling suggests that improving spending efficiency by one percentage point could raise GDP per capita growth by up to 0.3 percentage points annually. Case studies from East Asia illustrate this vividly. Vietnam’s disciplined investment planning and Korea’s results-based budgeting enabled both nations to deliver high-quality infrastructure and human-capital improvements without runaway spending. By contrast, economies that continue to channel vast sums into untargeted subsidies and bloated bureaucracies remain trapped in low-growth cycles.

Building Institutions That Deliver

Beyond numbers, Spending Smarter focuses on the power of institutions. Countries with transparent budgets, independent audits, and a professional civil service tend to achieve far better outcomes. The report highlights “spending reviews”, regular evaluations of government programs, as one of the most effective tools to eliminate underperforming expenditures. OECD members using these reviews have saved between two and four percent of GDP annually. Developing nations, the Bank suggests, could replicate this success by embedding review mechanisms within ministries and empowering finance departments to redirect funds to high-impact areas. Governance reform also means confronting inefficiencies in subsidies. The study shows that energy and agricultural subsidies often favor wealthier households; digital ID systems and targeted cash transfers can ensure support reaches those who need it most while freeing resources for schools, hospitals, and innovation.

The Digital Path to Fiscal Transformation

Technology emerges as the quiet hero of fiscal efficiency. E-procurement platforms, open-budget portals, and real-time expenditure dashboards allow governments to monitor spending and detect leakages instantly. In Africa and Asia, such digital systems have cut procurement costs and improved public trust. The report sees this as the future of governance: data-driven, transparent, and citizen-focused. Digital public infrastructure, when combined with evidence-based policymaking, enables what the authors call “precision budgeting”, allocating funds where they have the highest measurable return.

As the report closes, it warns that fiscal complacency is no longer an option. With debt burdens rising and growth slowing, the only sustainable path forward is to spend better, not just more. Governments that embrace efficiency, reallocation, and accountability can create fiscal space equivalent to several percentage points of GDP, without new taxes or loans. In the World Bank’s words, “Every dollar counts twice, once in what it delivers today, and again in what it builds for tomorrow.” Spending Smarter is ultimately a call for a new fiscal philosophy: one that treats public money not as a limitless resource, but as a powerful lever for equitable and lasting growth.