The relationship between the budget office and line ministries has changed substantially in many OECD countries. While traditionally focused on detailed control of individual spending items, budget offices are now expected to guide the overall shape of the budget while enabling better policy outcomes across government. At the same time, line ministries are taking on greater responsibility for allocating and reallocating resources, managing their budgets over the medium term, and being accountable for the results achieved with public funds.
This shift has not happened by chance. It reflects the combined effects of repeated economic shocks, tighter fiscal constraints, new budgeting frameworks, and rising public expectations for how governments manage money and deliver results. Tools such as top-down budgeting, multi-year expenditure frameworks, programme and performance budgeting, and spending reviews have placed new demands on both sides and reshaped how they work together. Beyond supporting fiscal discipline, budget offices now play a broader role in co-ordinating policy, guiding resource allocation, and supporting improvements in financial management across government. In parallel, line ministries are expected to plan more strategically, manage within expenditure limits, and take greater ownership of trade-offs and efficiencies.
Top-down budgeting has been central to this transformation. By establishing expenditure ceilings early in the process, governments encourage line ministries to take a more active role in shaping their budgets, making trade-offs, and planning ahead. When embedded in a medium-term framework, this approach strengthens predictability and creates space for more strategic dialogue between the budget office and ministries. Digital tools and better access to real-time data have further supported these developments, making processes more transparent, reducing administrative effort, and enabling faster and more informed decision-making.
These changes, however, require a cultural shift. Modern budgeting systems depend not only on updated rules and tools but also on new ways of working: co-ordination, dialogue, and mutual trust. Changing the relationship between budget offices and line ministries cannot be achieved solely through procedural reforms. It requires professional capability on both sides, shared understanding of policy and financial pressures, and consistent behaviours throughout the budget cycle. Experience from OECD countries highlights three pillars that are critical to making this transition effective:
Strengthened expertise within both the budget office and line ministries to plan, manage, and reallocate resources.
Effective interaction throughout the budget cycle, built on clear roles, structured processes, and regular communication.
Active participation of line ministries in the design and implementation of budgeting reforms, ensuring relevance and ownership
Despite progress, important challenges remain. Capacity gaps persist in many ministries, particularly in costing, strategic planning, and performance analysis. Fragmented digital systems limit the availability and use of financial and performance data. In some cases, increased autonomy for line ministries has not been matched by strong internal finance functions capable of supporting prioritisation and efficient resource use. Without credible financial management capacity within ministries, the benefits of top-down budgeting, greater flexibility, better planning, and more informed decision-making, cannot be fully realised.
Budget offices themselves also face new pressures. Their role increasingly requires both deep technical expertise and a solid understanding of policy, the ability to interpret data, and strong communication skills. Rather than focusing solely on reviewing line items, they must engage with ministries’ substantive work: understanding drivers of spending, operational realities, and future pressures. This enables them to assess trade-offs, identify risks, and guide reallocations across government. Building and sustaining this capability requires consistent investment in training, career development, and professional networks.
These institutional developments take place within a broader governance and political context. Budgeting is a technical process, but primarily a political one: ministers set priorities, negotiate trade-offs, and are accountable for results. Parliaments authorise expenditures, oversee implementation, and ensure democratic legitimacy. As political priorities evolve, budget offices and line ministries must adapt while safeguarding transparency, discipline, and alignment with fiscal objectives. Strengthening their relationship should therefore support informed political decision-making, reinforce accountability to the legislature, and help ensure that public resources are used effectively.
In this context, the Centre of Government (CoG) plays an important complementary role. While the budget office focuses on fiscal discipline and resource allocation, the CoG provides strategic direction and ensures coherence across major policy priorities. Close co-ordination between the CoG and the budget office helps align political priorities with budget decisions, ensures consistent signals to ministries, and supports more effective implementation. Where this co-ordination is strong, governments are better able to manage trade-offs, maintain fiscal discipline, and deliver whole-of-government results.
Looking ahead, there are clear opportunities to further improve how budget offices and line ministries collaborate. Continued reform and innovation can help ensure that budgeting systems support both fiscal sustainability and meaningful policy impact.
Key areas for further development include:
Strengthening the finance function in each line ministry to ensure ministries can plan, reallocate, and monitor resources effectively, and serve as credible counterparts to the budget office.
Investing in skills and systems across government to improve costing, trade-off analysis, risk management, and performance-informed budgeting.
Enhancing digital infrastructure, data integration, and analytical capacity, linking systems across institutions and building the ability to interpret and act on financial and performance information.
Fostering a culture of trust and shared accountability through structured engagement mechanisms, joint review processes, and continuous dialogue.
Reinforcing top-down budgeting and medium-term planning to provide predictability, support prioritisation, and strengthen the link between budgets and results.
These reforms require long-term commitment, political, institutional, and professional. Building capability is not a one-off exercise: it depends on ongoing investment in training, peer learning, and networks that connect practitioners across ministries. As governments face increasingly complex policy challenges and uncertain fiscal conditions, the way budget offices and line ministries work together will be central to maintaining fiscal discipline, improving value for money, and delivering better outcomes for citizens. The experience of OECD countries demonstrates that with the right structures, skills, and relationships in place, this partnership can become a powerful driver of more effective and sustainable public financial management.