Budget Transparency and Financial Sustainability in Inflationary Conditions: Evidence from European and Asian Countries

Objective: Budget transparency is one of the fundamental components of good governance, which helps increase accountability, enhance citizen participation in government financial decision-making, build public trust, and reduce corruption. In inflationary conditions, rising prices and eco-nomic volatility can lead to a reduction in budget transparency and subse-quently weaken financial sustainability. This study leverages global da-tasets to examine the relationship between budget transparency and finan-cial sustainability, with a particular emphasis on how inflation acts as a moderating variable. Method: This research has been carried out within the economic contexts of some selected Asian and European countries. The dependent variable in this respect is the OBI provided by the IBP, whereas explanatory variables are various financial sustainability indicators. Besides, the inflation rate was also taken as the moderating variable. The research aims will be achieved by analyzing data from selected Asian and European countries, comprising 15 observations for each country, using multiple regression techniques from 2010 to 2021. Findings: The findings of this study reveal that the Open Budget Index (OBI), which serves as a benchmark for assessing budget transparency across coun-tries, plays a pivotal role in enhancing financial sustainability within both Asian and European economies. Nevertheless, the analysis highlights that inflation weakens the beneficial association between budget transparency and financial sustainability. Additionally, the results derived from the Fisher test underscore significant differences in the OBI-financial sustainability relationship between these two regions, with the influence of OBI being notably stronger in European contexts compared to Asian ones. These findings, combined with the need for budget transparency, indicate that the areas of financial policy reforms, inflation control, and mechanisms for public oversight of financial activities require further follow-up. The result will be a marked improvement in the sustainability of fi-nance, and hence, countries will realize more sustainable financial and economic management.