Budgeting in Sweden

Ronnie Downes

OECD

37th annual meeting of OECD Senior Budget Officials Stockholm, Sweden, 9-10 June 2016

Contents

• Starting point: 2001 Budget Review

• A budget system in evolution: 2016 Budget Review

– What has changed – and why?

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

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

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

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

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

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

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

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

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

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.

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

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

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.

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

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

tack så mycket

ronnie.downes@oecd.org

oecd.org/gov/budgeting