1887

OECD Journal on Budgeting

The OECD journal on public sector budgeting, published three times per year. It draws on the best of the recent work of the OECD Working Party of Senior Budget Officials (SBO), as well as special contributions from finance ministries, and makes it available to a wider community in an accessible format. The journal provides insight on leading-edge institutional arrangements, systems and instruments for the allocation and management of resources in the public sector. Now published as a part of the OECD Journal subscription package.

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Budgeting for fiscal space and government performance beyond the great recession

In the course of the prolonged economic crisis that started in 2008, fiscal space has become a scarce commodity in OECD countries. This has not only broadened the appeal of a concept originally raised by emerging countries in the early 2000s, but has also extended its meaning to recognise its intertemporal nature and to highlight its endogenous features. Current projections indicate that fiscal consolidation needs and the effect of demographic change on social security may shrink non-pension fiscal space in OECD countries by some 18% between 2011 and 2030, exceeding current consolidation plans in many countries. The response to these needs should take place increasingly through budgets rather than ad hoc consolidation packages. To this end, the quest for fiscal space needs to be mainstreamed into budgeting by developing appropriate tools and procedures; the effort needs to extend beyond the annual budget process both in timeframe and scope; and many actors need to contribute to this effort in addition to ministries of finance and budget offices. In other words, generating fiscal space at the required scale needs not only a substantial revamping of budget practices, but also revisiting the temporal and institutional framework within which budgeting takes place.

JEL classification: H50, H61, H83

Keywords: Budget practices, budget framework, economic crisis, fiscal space, fiscal consolidation, incrementalist, performance, recession

English

JEL: H83: Public Economics / Miscellaneous Issues / Public Administration; Public Sector Accounting and Audits; H61: Public Economics / National Budget, Deficit, and Debt / National Budget; Budget Systems; H50: Public Economics / National Government Expenditures and Related Policies / National Government Expenditures and Related Policies: General
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