While it is recognised that effective state institutions are pivotal for economic development, their origins and what explains their cross-country differences are not well understood. We focus on the quality of budgetary institutions in developing economies, as efficient public financial planning in such countries is crucial for public goods and services provision. We argue that political institutions, seen as the system of checks and balances on the executive, are a key ingredient for building such capacity. Exploiting a recent database on public financial management performance in developing economies and an instrumental variable strategy, we generally find that stronger constraints on the executive have a positive effect on the ability of states to design, implement and monitor their budget. Our findings are robust to different specifications, controls and estimation methods. 1 In a companion paper, we have analysed how political institutions affect taxation in developing countries (Ricciuti et al. 2018). 2 Our approach complements other established areas of research on bureaucracy, such as frontline service delivery. See Pepinsky et al. (2017) for a review. 3 The public administration literature distinguishes four aspects of bureaucratic performance (see Lodge and Wegrich 2014).Coordination capacity involves bringing together disparate organisations to engage in joint action; analytical capacity is the ability to analyse information and provide advice and vulnerability assessments; regulation capacity involves control, surveillance, oversight and auditing; and delivery capacity relates to the exercise of power and providing public services in practice. 4 The existence of first-order differences between investment cost and capital value in developing countries-where public investment accounts for more than 50% of total investments-is emphasised by Pritchett (2000).