Archive for the ‘Top-Down Budgeting’ Category

Should Aggregate Expenditure Ceilings be Comprehensive?

Monday, May 9th, 2016

Aggregate expenditure ceilings are today a feature of budgeting in many OECD countries. An article of mine just published in the OECD Journal on Budgeting addresses a key design issue of the coverage of aggregate expenditure ceilings – should they cover the totality of government expenditure, or is it legitimate to exclude certain categories of expenditure? (more…)

Top-Down Budgeting & the Setting of Ministry Expenditure Ceilings

Tuesday, August 20th, 2013

Top-down budgeting is today widely regarded as a key element of good budgeting practice, and with good reason. In its core sense, agreed by all, top-down budgeting calls for the budget preparation process to be framed by a hard aggregate expenditure ceiling – approximately speaking, a limit which applies to the totality of government expenditure. The aggregate ceiling should be set in a top-down manner, which means that it is set at the start of the budget preparation process prior to any consideration of “bottom-up” spending requests from spending ministries. It should also be hard in the sense that, once set, it is essentially not varied during the budget preparation process. Establishing and enforcing such an aggregate expenditure ceiling is today generally viewed as crucial to ensuring that aggregate expenditure does not grow faster than is consistent with government’s aggregate fiscal policy objectives, and in particular with deficits and debt discipline.

This pertains to aggregate expenditure ceilings. But what does it mean for the setting of ministry expenditure ceilings. This is where the consensus disappears. (more…)

How the UK Will Wield the Razor

Sunday, June 13th, 2010

The new British government has just released a document explaining the process it will use to achieve drastic fiscal consolidation during this year’s Spending Review. The process will be closely modeled on the successful Canadian program review of 1994-95. (more…)

Keeping the Lid on Aggregate Spending

Tuesday, June 8th, 2010

How can government maintain a firm “top-down” limit on aggregate spending during the budget preparation process? I suggested in an earlier blog that an answer to this could be found in a budget process based on two key principles. (more…)

Top-Down Budgeting and Fiscal Exit Strategies: Getting Spending Priorities Right

Wednesday, April 28th, 2010

As countries move to restore their public finances in the wake of the financial crisis, firm control of aggregate expenditure has become more important than ever before. Part of this is ensuring that, after an aggregate expenditure ceiling is set, it is respected throughout the budget preparation process. This is what top-down budgeting seeks to achieve. In practice, however, it is not easy. The central difficulty is how to divide the aggregate expenditure ceiling into ministry ceilings. This is an issue that I will discuss in this and a series of subsequent blog pieces. (more…)

Ministry Ceilings under Top-Down Budgeting

Wednesday, March 24th, 2010

Countries are often advised to set firm ministry (or sectoral) budget ceilings right at the start of the budget preparation process, as an entirely “top down” process prior to any budget bids or other bottom-up input from spending ministries. This, they are told, should happen immediately following a government decision on the level of aggregate expenditure ceiling. This raises an important question: is such an early decision on ministry ceilings compatible with good expenditure prioritization? (more…)