A Theoretical Approach of “Invisible Hands” in Public Finance Management: An Urgent Need for Fiscal Policy Sustainability in Developing Countries

Abstract

The selfish interest of some government officials affects the smooth functioning of the pillars of public expenditure and accountability (PEFA) in public finance management (PFM) through their ‘‘invisible hands”, which deprive the government from achieving its objectives of fiscal policy. This study examines the shortcomings of the pillars of public expenditure and accountability (PEFA) in developing countries and its effects on public finance management (PFM) using a theoretical approach. The study critically examined the functionality of the pillars using a comparative regional and income analysis and why it has not been effective in developing countries. The paper ends up by suggesting key policies that can be used to avoid the selfish interest of individuals in PFM.