Spending reviews should be systematically integrated into the preparation of the government’s budget. This link to the budget process allows recommendations from spending reviews to be connected to the government’s fiscal management and appropriation processes. Most OECD countries link the spending review process to the annual budget process or the medium-term expenditure framework.
Spending Reviews
The purposes of spending reviews include enabling the government to manage the aggregate level of expenditure, identifying savings or reallocation measures, and improving effectiveness within programs and policies.
Key messages
Political leadership and support are critical to ensure the viability and sustainability of spending reviews. This leadership is particularly important at the inception where the objectives and scope of reviews are set and at the conclusion where final decisions on adopting recommendations are made. Political support for spending reviews is usually strongest at the beginning of a political term
It is important to have clear governance arrangements at all stages of the spending review process. This often includes a working group tasked with carrying out the analysis and a steering group that provides guidance and monitors progress.
The Ministry of Finance performs a fundamental role in a spending review. It is involved at all stages and is responsible for the link between a spending review and the budget process. Line ministries are also involved in all stages of the spending review process and are responsible for implementing the decisions from a review in co-ordination with the Ministry of Finance. Governance arrangements for spending reviews should be clearly articulated in Terms of References.
Context
Nearly all OECD countries undertake spending reviews.
In 2023, 34 out of 35 OECD countries (97%) reported having used spending reviews at least once. Of which 20 countries use spending reviews annually, 9 countries periodically, and 5 countries have only carried out pilot reviews so far. The only OECD country that reported not using spending reviews says the practice is under consideration.
Several performance tools and approaches feed into spending reviews
Spending reviews rely on the existing stock of evidence from various performance practices. including performance budgeting, performance audits, and monitoring and policy evaluation.
Reviewing this information, along with expenditure data, allows spending reviews to identify potential savings and reallocation measures within a relatively short timeframe.
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