Spending reviews support the sustainability of public finances through systematic analyses of existing expenditures. They help governments to manage their overall level of expenditure, identify savings or reallocation measures to fund new priorities, and improve effectiveness within programmes and policies. While there are differences in their design and implementation across countries, key elements that contribute to successful outcomes include clear objectives and scope, strong political leadership and commitment, and a direct link with the budget process (Tryggvadottir, 2022).
The 2023 OECD Survey on Spending Reviews showed that almost all OECD countries (34 out of the 35 OECD countries that responded, 97%) are conducting or have conducted at least one spending review, compared to 31 of the 37 (84%) OECD countries responding in 2020 (OECD, 2021). The six OECD countries that have since introduced spending reviews are Belgium, Costa Rica, Czechia, Hungary, Slovenia and Switzerland. The increase reflects the interest in using spending reviews as a tool to improve fiscal discipline and the sustainability of public finances. By 2023, more than half of OECD countries were conducting spending reviews annually (20 out of 35, 57%), while 9 conducted them periodically (26%) and 5 had only conducted pilot reviews (14%) (Figure 9.5).
Spending reviews have become a core instrument for prioritising and reallocating expenditure, and a permanent feature of the budget process in many OECD countries. Their objectives vary depending on the needs and goals of governments and countries commonly use them to pursue multiple objectives simultaneously. For example, a majority of countries (24 out of 30 OECD countries with available information, 80%) identified improving the effectiveness of programmes and policies as a key objective of spending reviews. Controlling total expenditure was a key objective for 16 (53%), while 12 (40%) reported using them to align expenditure with government priorities. These multiple objectives reflect the flexibility of spending reviews, which can be tailored to meet countries’ changing economic conditions and specific circumstances (Figure 9.6).
Aligning the review process with the budget cycle is crucial if spending reviews are to have a meaningful impact. Two-thirds (22 out of 33) of the OECD countries that answered to the survey state that the recommendations from the review are presented before the formulation of the budget begins to inform the budget negotiations. In 13 countries (39%), the recommendations are adopted and integrated into the upcoming budget and 7 countries (21%) included them in their multi-annual budget planning (Figure 9.7).
Political leadership and commitment are crucial to defining the objective and scope of spending reviews, adopting policy options, and making decisions based on the review findings. In 2023, cabinets were involved in setting the objectives and scope in 15 out of 32 OECD countries with information available (47%). In slightly more than half of the countries (17, 53%), the cabinet made the final decision on adopting spending review recommendations (Online Tables J.6.1 and J.6.2).
