Fiscal policy decisions play a critical role in determining whether countries can achieve their development objectives. Yet in many contexts, decisions on taxation, public spending and borrowing are made through separate processes, creating policy misalignments that can undermine progress on climate action, health, gender equality, social equity and other national priorities. This paper introduces UNDP’s Fiscal Policy Coherence (FPC) approach, developed by the UNDP Public Finance for SDGs team within the Sustainable Finance Hub, to support governments align fiscal policy instruments across revenue, expenditure and debt with the development goals they have adopted.

Drawing on pilot applications in Bhutan, Ecuador, Kenya, Liberia and Zimbabwe, the publication presents a practical framework for identifying fiscal policy misalignments, estimating their development and fiscal costs, and prioritizing reforms through a whole-of-government approach. The methodology combines evidence, political economy analysis and institutional dialogue to assist government-led reform processes that strengthen development outcomes while improving the effectiveness of public finance systems.

The paper contributes to the growing international agenda on financing sustainable development, including the Sevilla Commitment and the G7 Declaration on Domestic Resource Mobilization, both of which call for greater policy coherence and alignment between fiscal systems and national development objectives. The reforms needed are largely already under way. The challenge is to connect, prioritize and sequence them around national development objectives.