OECD Principles on Budgetary Governance - Andrew Blazey, OECD
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This document reports on the implementation of budgetary governance recommendations from the OECD Council. It finds that medium-term expenditure frameworks and fiscal rules have been widely applied. Notable improvements include accrual accounting and independent fiscal institutions. Spending reviews to examine efficiency and effectiveness are also common. Opportunities exist to further integrate cross-cutting goals like gender equality and sustainability. Future work should broaden the analysis of challenges and technologies supporting budget transparency and performance. Regular monitoring will continue to assess implementation progress.
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OECD Principles on Budgetary Governance - Andrew Blazey, OECD
- 1. Report on the Implementation of the Recommendation of the Council on Budgetary Governance Andrew Blazey and Juliane Jansen Public Governance Directorate 40th Senior Budget Officials’ Meeting Tallinn, 5 – 6 June 2019
- 2. 2 Objective of the monitoring report • Periodic reporting • Assessment of the implementation • Analyse the relevance of the Recommendation • Opportunity to refine the instrument • Propose further work
- 3. Budget Governance Principles 3 Budgeting within fiscal objectives Quality, integrity & independent audit Performance, Evaluation & VFM Comprehensive budget accounting Effective budget execution Alignment with medium-term plans and priorities Performance, evaluation & VFM Transparency, openness & accessibility Participative, Inclusive & Realistic Debate Fiscal Risks & Sustainability Capital budgeting framework Strategic Qualitative Technical
- 4. Dissemination Thematic and regional network meetings Reviews 4 Financial Management and Reporting Parliamentary Budget Officials and IFIs Performance and Results Budget & Health Officials Infrastructure and PPPs
- 5. • OECD Guidance • Composite Indicators – Medium-Term Expenditure Framework (established) – Performance Budgeting (established) – Infrastructure Governance (under preparation) – Budget Transparency (under preparation) Dissemination cont./ 5
- 6. Implementation: Observations 1. Widely applied – medium-term expenditure frameworks and fiscal rules. 2. Notable improvements –accrual accounting and the institutional coverage of financial accounts. 3. Trending developments –independent fiscal institutions and gender budgeting 4. Increased practice –value for money for new expenditure and previously committed expenditure. 5. Further implementation – open, transparent and accessible budgets. 6
- 7. 1. Cross-cutting policy goals – economic, environmental and social outcomes, including gender equality and SDGs. 2. Management of balance sheets and fiscal risks, and the inter-dependencies with fiscal strategy. 3. The use of technology across institutions for timely, accessible and comprehensive information on implementation and performance. Challenges and opportunities 7
- 8. Next steps Comments SBO Meeting 5-6 June Feedback by written procedure PGC Approval 13-15 Nov Discussion Executive Committee OECD Council meeting 8
- 9. Proposed future action • Broaden the scope of analysis in response to identified challenges and opportunities. • Report to the PGC in three years on whether or not there is a need to update. • Report through the PGC to the Council on the continued monitoring of the implementation of the Recommendation in five years. 9
- 10. IMPLEMENTATION OF THE OECD PRINCIPLES OF BUDGETARY GOVERNANCE 10
- 11. Budgeting within fiscal objectives 11 Budgeting within fiscal objectives Source: OECD (2018), OECD Budget Practices and Procedures Survey 0 5 10 15 20 25 30 35 40 Nominal Structural Ceiling Target Ceiling Growth rate Upper limit Allocation constraint Fiscal objectives and rules In place Not applicable Budget balance RevenueExpenditureDebt • Most countries anchor the national budget framework to one or more fiscal rules when executing fiscal policy
- 12. Alignment with medium-term plans 12 Alignment with medium-term plans and priorities Source: OECD (2018), OECD Budget Practices and Procedures Survey • Inter-dependencies across central government agencies and political parties reveal the complexity of planning processes. • Medium-term plans can include the SDGs, wellbeing, environment, and national objectives.
- 13. Performance, evaluation and value 13 Performance, evaluation & VFM Source: OECD (2018), OECD Performance Budgeting Survey • Spending reviews have been widely adopted to examine the effectiveness and efficiency of public expenditure. • The incentives on departments and the connection to budget decisions remain challenging. Adoption of spending reviews (2011-2018)
- 14. Quality and integrity 14 Quality, integrity & independent audit • Since 2012, countries with IFIs have increased from 19 to 29. • The independence of offices is the key governance determinant on the success of the offices. • A culture of performance review has become standard practice
- 15. 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 2012 2018 Transparency and openness 15 Transparency, openness & accessibility Source: OECD (2018), OECD Budget Practices and Procedures Survey
- 16. Participative and inclusive 16 Participative, Inclusive & Realistic Debate AUS CHE CZE DNK EST GBR GRC HUN LUX LVA NLD NZL POL SVK SVN FRA TURAUT BEL CAN CHL DEU ESP FIN IRL ISL ISR ITA JPN KOR MEX NOR PRT SWE Introduced Under Consideration (2) Not practised (15) Source: OECD Budgeting Outlook Survey 2018 • Gender budgeting has become an established practice across the OECD. • Countries are requesting advice on effective ways to include gender in policy decision-making processes.
- 17. Fiscal risks and sustainability 17 Fiscal Risks & Sustainability Source: OECD (2018), OECD Budget Practices and Procedures Survey Existence of fiscal risks management framework or guidance
- 18. Capital budgeting framework 18 Capital budgeting framework • Support to countries through reviews and implementation support on the governance of infrastructure investment. • Cross-cutting with balance sheet management and fiscal risk management. • Focus areas include planning, prioritisation, implementation and review.
- 19. Comprehensive budget accounting 19 Comprehensive budget accounting 18% 9% 73% Cash Basis Cash Transitioning to Accruals Accruals
- 20. Effective budget execution 20 Effective budget execution 5 2 1 5 12 27 25 29 17 5 8 0 5 10 15 20 25 30 Borrowing against future appropriations Lump-sum appropriations Carry-overs Re-Allocations Utilised (without limits) Utilised (with limits) Not Utilised Number of countries Source: OECD (2018), OECD Budget Practices and Procedures Survey
- 21. Thank you