Fragility, Institutions, and Fiscal Policy – A Critical Review

Authors: Ed Laws and Deval Desai

This policy brief examines fiscal governance in fragile and conflict-affected settings (FCAS) and its role in shaping institutions. Effective engagement requires moving beyond elite-focused analyses to consider broader societal and institutional impacts. Fiscal governance interacts with security, justice, and service delivery institutions. Policies must account for historical governance structures, societal norms, and contemporary fiscal behaviors. Reform efforts should foster trust between citizens and the state by supporting inclusive state-society bargaining. Realistic timelines for reform are essential, as rapid implementation risks creating policies that mimic stable states without achieving functionality. As aid budgets shrink, alternative investment sources, including private sector engagement, must be approached with sensitivity to institutional stability and conflict dynamics.

This brief calls for a holistic, politically aware approach to fiscal governance, urging international actors to bridge gaps between fiscal policy, governance, and peacebuilding. A deeper understanding of the institutional dimensions of fiscal practices is crucial for fostering long-term stability in FCAS.