“The budget is not just a collection of numbers, but an expression of our values and aspirations.” — Jacob Lew (former Director of the OMB)
Fiscal systems worldwide are under unprecedented strain. Public debt has surged after repeated crises, while fiscal space has steadily narrowed. Simultaneously, long-term pressures—such as population aging, climate transition, and rising healthcare costs—are intensifying. These challenges are now colliding with political dynamics and governance constraints that hinder the creation of a stable, long-term reform foundation.
Technical solutions alone may not be sufficient to address these challenges. When citizens lack a clear understanding of how public budgets work—or why difficult trade-offs are unavoidable—reforms become fragile, short-lived, and easily reversed.
Why fiscal reform is politically hard
Fiscal reform is never purely economic; it is inherently political. Voters naturally favor immediate benefits over long-term outcomes. This “intertemporal bias” creates strong political incentives for short-term policies—such as untargeted subsidies or tax cuts—rather than reforms that safeguard sustainability. As a result, rising fiscal deficits often reflect political incentives more than policy mismanagement.
Another significant barrier is limited public understanding of fiscal realities. Many people struggle to interpret large fiscal numbers, assess complex trade-offs, or comprehend the compounding effects of public debt. The technical complexity of budgets can obscure risks and make reforms seem arbitrary or unfair.
There is also an asymmetry in incentives. Fiscal reforms often impose immediate and visible losses while delivering gradual and widely distributed gains—such as subsidy removals or tax base expansions. This asymmetry enables well-organized groups facing immediate losses to overpower broader public interests and future benefits, distorting policy outcomes.
Populism exploits this imbalance by offering easy promises and ignoring fiscal realities. Polarization erodes trust and turns fiscal policy into ideological warfare rather than collective problem-solving. In this environment, lack of trust becomes the binding constraint. Without trust, even the most technically sound policies will fail to gain legitimacy. Building public trust, therefore, is not optional—it is the foundation of fiscal sustainability.
How public understanding can unlock fiscal reform
To overcome these challenges, the Organisation for Economic Co-operation and Development (OECD) has proposed four key strategies emphasizing not only what governments should do, but also how they should communicate reforms better.
1. Empower credible fiscal advocates
Independent fiscal institutions can help the public understand why long-term reforms are essential and explain why issues like aging populations, environmental costs or debt trajectories matter by combining rigorous analysis with clear communication.
2. Improve fiscal literacy among both the public and elected officials
The OECD’s 2023 survey has revealed significant gaps in financial literacy and numeracy among many adults. Without sufficient knowledge and tools to interpret complex government budgets, citizens need simpler explanations and practical scenarios to relate the consequences of fiscal policies to their everyday life.
3. Engage citizens in a substantive two-way dialogue
Traditional consultations often feel tokenistic, breeding cynicism. In contrast, well-designed substantive participatory processes can help citizens better grasp complex trade-offs in public budgeting, particularly when grounded in real-life experiences and supported by accessible tools.
4. Prioritize clear and human-centered communication
People remember stories more than technical tables and understand causes better than isolated facts. Carefully designed dashboards, transparent reporting and concise summaries can turn abstract fiscal concepts into information that the public can use and trust.
Advancing smarter fiscal conversations in ASEAN+3
Policymakers in ASEAN+3 face overlapping challenges: managing post-crisis fiscal pressures, resisting populist demands for short-term relief and restoring public trust amid rising polarization. Addressing these challenges requires more than sound policies and technical expertise. It demands a strategic, narrative-driven approach to how fiscal policy is explained, debated and understood.
Governments must move beyond numbers and jargons. Complex concepts should be translated into language people can grasp—without diluting the facts. Instead of framing reform as a narrative of austerity, policymakers can emphasize intergenerational fairness. For example, “today’s choices shape tomorrow’s opportunities”
While equipping officials and the media with intuitive fiscal literacy tools, communication should be tailored to how people process information—through stories, visuals and clear cause-and-effect logic—not policy manuals. Independent fiscal institutions, in particular, must act as trusted messengers, supporting transparency and guiding public understanding through consistent, impartial analysis.
Reimagining the foundations of fiscal reform
As fiscal pressures intensify and political environments become more complex, the success of fiscal reforms now hinges on public engagement. This requires renewed efforts to strengthen public trust and foster inclusive dialogue across all levels of society.
By moving beyond abstract figures and enabling genuine public engagement, policymakers can cultivate the societal consensus needed for lasting reforms. When people understand trade-offs, they are more willing to accept short-term costs for long-term gain and stability.
Achieving fiscal sustainability goes beyond balancing the books. It is about building a collective understanding of the future we are preparing—together.