Financial Stewardship: A Cornerstone of Good Governance

Perhaps the most striking trend since the Index was launched has been the deterioration of financial stewardship capabilities worldwide. Between 2021 and 2025, the Financial Stewardship pillar showed the sharpest decline across all seven pillars of the CGGI, making it the only pillar to worsen in most regions. The Country Budget Surplus indicator has seen particularly steep declines since 2021.

Many governments that were already grappling with growing debt took on immense additional expenditures during the COVID-19 pandemic for health responses and economic support. With interest rates having risen sharply from their historic lows, the cost of servicing debt has increased dramatically and further strained government budgets.

Encouragingly, some countries have defied this trend and risen in the Financial Stewardship pillar by prioritising debt reduction, institutional reform, and long-term planning.

Jamaica, which has demonstrated particularly strong performance in the Government Debt and Country Budget Surplus indicators, significantly reduced its public debt by recognising the need for fiscal reform. Similarly, Portugal, which rose by two places in the Financial Stewardship pillar, cut public debt from 132.9% of GDP in 2014 to 94.4% in 2024 after facing near-insolvency in 2011.¹ The government fundamentally reorganised its approach to debt sustainability, adopting multi-year budgeting frameworks and renegotiating debt terms for state-owned enterprises, which allowed it to post consecutive budget surpluses in 2022, 2023, and 2024.

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Capable Governments Deliver Better Outcomes

(r = 0.93)

^{Source: Chandler Good Government Index 2025. Each point represents a country’s average score for government capabilities (x-axis) and outcomes (y-axis) across the seven CGGI pillars.}

The Governance Gap

The decline in financial stewardship reflects a broader weakening of governance capacity. Between 2021 and 2025, 57 countries saw their CGGI scores decline, while only 45 made gains. Countries that ranked in the top half in 2021 generally improved over five years, while those in the bottom half declined. We describe this growing divide as “the governance gap.”

Only five countries – the UAE, Spain, Vietnam, Mongolia, and China – have defied this trend by making consistent year-on-year improvements over the past five years. Their success reflects the rewards of sustained efforts to build and streamline government capabilities. Vietnam, for example, rose by 12 places as a result of reforms focused on efficiency, accountability, and digital transformation. In 2025, the government reduced the number of its ministries and ministerial-level agencies from 22 to 17 as part of a major restructuring.² A nationwide digital skills programme for civil servants and an online portal for tracking public service delivery, both introduced in 2025, also reflect the government’s ongoing efforts to strengthen its capabilities. Mongolia, meanwhile, has risen 12 places over five years after introducing merit-based recruitment and performance systems for civil servants, setting out a long-term development strategy, and moving hundreds of public services online.

The governance gap is also widening between geographical regions. Over the past five years, countries in Africa and Latin America & the Caribbean – already among the lowest-ranked regions – have experienced the sharpest declines in CGGI scores, while Europe & North America and Asia Pacific have continued to strengthen their positions. The growing divide is also clear at the sub-regional level. South Asia and Sub-Saharan Africa, the weakest-performing regions on the CGGI, have seen their scores fall further over the past five years.

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Widening Governance Gap (2021–2025)

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^{Source: Chandler Good Government Index 2025}

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Widening Governance Gap by Region (2021–2025)

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^{Source: Chandler Good Government Index 2025}

Adapting to a Multipolar World

Since 2021, performance on the Global Influence & Reputation pillar has generally declined, with the drop becoming particularly pronounced in the last year. Only the Middle East, Central & West Asia region bucked this trend, while the average score for other regions fell.

Escalating conflicts and regional rivalries, such as the Russian invasion of Ukraine in 2022, have disrupted diplomatic networks, reshaped global alliances, and increased tension in international relations. Countries have been forced to realign politically and economically, which has undermined even historically strong alliances.

Trade disruptions, rising protectionism, and sanctions have also limited countries’ access to markets, while disruptions to trade with conflict-affected regions have curtailed the ability of many nations to exert influence through commercial and economic partnerships.

The fragmentation of traditional alliances and power structures is clearly troubling, but it creates opportunities for countries that can build effective diplomatic capabilities suited to an increasingly multipolar world. Long considered a bridge between Europe and Asia, Türkiye has leveraged its geographic, cultural, and diplomatic ties to enhance its role on the global stage. Notably, Türkiye’s ranking in the Global Influence & Reputation pillar has risen, even as most countries’ scores have fallen. It has consistently ranked in the CGGI top ten for International Diplomacy over the past five years. Türkiye now maintains the third-largest diplomatic mission in the world with 261 missions, and has nearly doubled the number of its embassies in Africa to 44 since 2003.³

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Average Pillar Score Changes by Region (2021–2025)

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^{Source: Chandler Good Government Index 2025}

Strong Governance Does Not Depend on Wealth

National wealth is often associated with the quality of governance. The top-performing countries in the CGGI are predominantly typically high-income, while those ranked lower tend to have less economic capacity. But a closer look at the data reveals that economic resources, while important, are not the sole determinant of effective governance or strong outcomes.

Rwanda, Vietnam, and Indonesia, for example, significantly outperform peers at comparable income levels. Investing in and strengthening government capabilities can strengthen governance quality regardless of national wealth.

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Country CGGI Scores Increase with Income Levels

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^{Source: Chandler Good Government Index 2025}

The Foundations of Effective Governance

Across five years of CGGI data, the indicators for Regulatory Governance and Rule of Law have been the strongest and most consistent predictors of high overall CGGI scores – a reminder that these are two core components of effective governance. Ethical Leadership, which measures the integrity and accountability of those in public office, also shows a close correlation with overall performance. When leaders act with integrity and accountability, they strengthen public trust and enhance their government’s capacity to serve citizens fairly and effectively, creating the conditions for people and communities to flourish.