Money on the table: Why better budget planning is key to fixing the water crisis

Water underpins good health, food production, and the energy that powers businesses. It also supports an estimated 1.7 billion jobs worldwide. Yet the world is massively off-track on Sustainable Development Goal 6, which aims to ensure clean water and sanitation for all by 2030. The water, sanitation, and hygiene (WASH) financing gap demanding dramatically higher public investments. And even the money governments do allocate for water routinely goes unspent. The Paradox: A Spending Gap Within a Financing Gap The World Bank Group's 2024 report, Funding a Water-Secure Future, documents that water sector budget execution averaged only 72 percent between 2009 and 2020, meaning roughly 28 cents of every allocated dollar is never spent. Sub-Saharan Africa averages around 62 percent. In other words, countries are failing to close the financing gap while also leaving allocated money on the table. The cost is borne by people still without reliable access to clean water. Why Does the Money Stay on the Table? The reasons are often institutional. A water infrastructure project does not fail because governments do not care. It fails because the sector lacks institutions that can translate long-term targets to an implementable and time-bound set of actions. Project preparation is rushed. Procurement requires sign-offs from multiple agencies that do not coordinate. By the time land is acquired, environmental clearances secured, and procurement approvals completed, little time remains in the fiscal year to deliver projects. Unspent funds return to the treasury, delaying investments in water infrastructure. This is not unique to one particular country, but a systemic challenge many countries face in translating public investment into results. A budget allocation is not a plan but a promise. Unless backed by a well-sequenced, multi-year program —one that works through land, design, procurement, and construction in deliberate order —the money will keep sitting on the table. Where PFM and PIM Come In — and Why Water Forward Depends on Them The World Bank Group's Water Forward initiative recognizes that mobilizing more resources is only half the battle. The other half is ensuring governments can use what they have. This is where Public Financial Management (PFM) and Public Investment Management (PIM) become critical. PFM governs how governments plan, allocate, and spend public money; PIM is about how they select, prepare, and implement public investment projects. When these systems are weak — for example, they have no medium-term expenditure plan, no project pipeline, no alignment between sector goals and annual budgets — even a well-funded water ministry will struggle to convert allocations into infrastructure. Upstream PFM functions play a vital role in downstream execution in the water sector. Using the Public Expenditure and Financial Accountability (PEFA) framework, budget reliability along with policy-based fiscal strategy and budgeting emerge as the two dimensions most strongly associated with water-sector budget execution, with policy-based fiscal strategy and budgeting showing the stronger relationship. Water spending is capital-intensive with long project cycles. What matters most is whether budgets were realistically planned. Countries that embed water spending in coherent multi-year frameworks and align budgets with sector strategies consistently show higher execution rates (Figures 1a, 1b). More money alone is not enough; without strategic planning architecture, spending simply does not materialize. Strengthening governance, institutional coordination, and policy coherence in the water sector is therefore essential to improving budget execution. Note: 1A cross-sectional sample of countries is constructed with (i) a PEFA assessment including Pillar I (Budget Reliability) and Pillar IV (Policy-based Fiscal Strategy and Budgeting) scores and (ii) a matched observation on water sector budget execution rates of the final budget for the same (or nearest-available) fiscal year.PEFA letter grades were converted to numerical scores following the standard methodology adopted by the PEFA Secretariat: A = 4, B+ = 3.5, B = 3, C+ = 2.5, C = 2, D+ = 1.5, D = 1, D* = 1; NA and NU scores were excluded. Multiple assessments were available within a short window; we selected the assessment closest to the execution year. The final sample includes 22 countries spanning [regions; e.g., Africa (AFR), South Asian (SAR), East Asia and Pacific (EAP), Europe and Central Asia (ECA), Latin America and the Caribbean (LAC)]. We define “high” vs. “low” execution using a 60 percent threshold (see Threshold choice and robustness below). The sample includes a substantial share of African cases, reflecting data availability and sector engagement. Source: Authors’ illustration using data from PEFA and World Bank Water data (accessed in April 2025). The Reform Imperative While mobilizing more financing remains important, the more immediate and overlooked imperative is making existing budgets executable. Closing the water financing gap starts with strengthening the systems that turn allocations into projects and projects into results. That means investing in medium-term planning, building credible project pipelines, preparing investments before funds are allocated, and strengthening the institutions that connect sector priorities to public spending. Countries that can align budgets with long-term sector strategies are far more likely to translate commitments into infrastructure and services. This is also where Water Forward can help shift the conversation from financing to delivery. Through country-led Water Compacts, governments, development partners, and investors can align around a shared reform and investment agenda, bringing policy reform, institutional strengthening, investment planning, and financing into a single framework. By improving project preparation, coordination, and the link between water sector priorities and public investment decisions, this approach can help ensure that scarce resources are not only budgeted but actually spent. More financing matters, but better prepared, better sequenced, and better governed spending is what turns allocations into services people can count on. The money is often there. The challenge is building systems that can put it to work.