Budgeting in Sweden - Ronnie Downes, OECD
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Sweden has an advanced and effective budget process that meets OECD recommendations. Priorities for reform include reducing fragmentation in fiscal risk reporting, performance budgeting, and policy evaluation. Sweden should also leverage practices in cross-cutting collaboration and gender budgeting by taking more open and participatory approaches to policy design, budgeting, and accountability to improve performance.
Budgeting in Sweden - Ronnie Downes, OECD
- 1. Budgeting in Sweden Ronnie Downes OECD 37th annual meeting of OECD Senior Budget Officials Stockholm, Sweden, 9-10 June 2016
- 2. Contents • Starting point: 2001 Budget Review • A budget system in evolution: 2016 Budget Review – What has changed – and why?
- 3. Recap: 2001 Budget Review Over-arching fiscal surplus rule 2-phase budget cycle Spring Fiscal Policy Bill Autumn budget MTEF New IFI: Fiscal Policy Council Performance
- 4. Key observations: Streamlining of the fiscal and budgetary process • Spring phase now focuses on medium- term fiscal plans • Expenditure detail reserved for Budget Bill in Autumn Process has been streamlined since earlier OECD Review
- 5. While it has served as a visible anchor for fiscal policy, several factors impact its future viability: Key observations: Commitment to the 1% surplus rule appears to be waning • Pressing budgetary demands for more investment and for fiscal room to respond to the refugee crisis • EU-wide harmonisation towards a budgetary-balance norm
- 6. The medium-term framework is distinguished by its fixed character Key observations: Limits of the medium-term framework are being tested • A “budgetary margin” gives some in- built flexibility • However, this may prove insufficient for the extraordinary budgetary demands of the refugee crisis
- 7. As a general principle, policy-making in Sweden is characterised by:- Key observations: Policy-making process is highly collaborative • The “silo-busting” practice of gemensam beredning (joint preparation), facilitating cross- governmental input into policy measures. • A principle of “crown for crown” – now under pressure
- 8. A strong network of independent institutions support the budget process. In particular, the Swedish Fiscal Policy Council established in 2007 is now an authoritative fiscal commentator. However: Key observations: Strong independent institutions • The Council needs stronger access to information to be able to reconcile Government disputes • Its specific findings are not necessarily designed to be directly relevant for the upcoming budget
- 9. There is an extensive range of reports through the accountability cycle Key observations: The quality & transparency of financial reporting is high • Financial statements are clear, with focus on central government • The link between fiscal analysis, budgeting and accrual accounting remains limited • The Annual Report has limited impact on budget discussions
- 10. There are specific requirements for reporting on State guarantees and SOEs, and a series of reports on long- term sustainability. However: Key observations: Systematic approach to managing fiscal risks • There is so far no aggregated view on these risks • There is limited analysis of the financial situation at the sub- national level
- 11. The 2014 “PISA shock” has spurred a review of internal evaluative and performance frameworks. Specific issues include: Key observations: Performance budgeting is in a state of flux and review • The performance framework is not yet very systematic • Indicator and target selection is not systematically integrated with higher level objectives • There is no clear overall reporting to parliament or other stakeholders
- 12. A number of sector-specific ‘inspectorates’ undertake critical appraisal and assessment. However: Key observations: Fragmented policy evaluation • The results are not designed as tools to inform public or parliamentary discourse • The results do not inform budget discussions A new Spending Review pilot currently being undertaken will need to be rapidly expanded to examine broader areas of government spending.
- 13. Trust in the public administration is high as regards integrity and quality and so the budget process is regarded as an internal concern. However: Key observations: Limited proactive engagement by civil society stakeholders • consider taking steps to solicit the views and inputs of stakeholders to promote more participative budget development • Potentially relevant also for more impactful gender budgeting
- 14. Building on the established commitment to gender mainstreaming, the new gender budgeting approach will: Key observations: Gender budgeting is a current priority • Rigorously assess the gender impact of policy alternatives • Use gender assessments to decide upon resource allocation • Identify and avert gender- negative policies from the outset • Promote gender-responsive policies
- 15. Summary: 2016 Budget Review Sweden has a sound, advanced and effective budget process which meets all of the provisions of the OECD Recommendation on Budgetary Governance, some in exemplary terms. Priorities for future reform • Reduced fragmentation in relation to certain budgetary practices, most notably reporting on fiscal risks, performance budgeting and policy evaluation. • Leverage advanced practices in areas such as cross-cutting collaboration and gender budgeting with advanced initiatives in more open, participative approaches to improve policy design, budget prioritisation and performance accountability.
- 16. Budgeting within fiscal objectives Compliance with OECD Budget Principles Quality, integrity & independent audit Performance, Evaluation & VFM Comprehensive budget accounting Effective budget execution Alignment with medium-term strategic plans and priorities Performance, evaluation & VFM Transparency, openness & accessibility Participative, Inclusive & Realistic Debate Fiscal Risks & Sustainability Capital budgeting framework
- 17. Budgeting within fiscal objectives Compliance with OECD Budget Principles Quality, integrity & independent audit Performance, Evaluation & VFM Comprehensive budget accounting Effective budget execution Alignment with medium- term strategic plans and priorities Performance, evaluation & VFM Transparency, openness & accessibility Participative, Inclusive & Realistic Debate Fiscal Risks & Sustainability Capital budgeting framework