Large portions of spending by national governments can be considered mandatory, in that they are incurred through legislative requirements rather than annual budget approvals. As populations age and public debt increases, the impact of mandatory spending on the budget is increasing. If large portions of the budget are pre-allocated through processes that are largely outside of the budget, governments may reduce their ability to respond to crises and other spending needs. Drawing on practices from eight OECD countries, this paper examines how governments define, monitor and review mandatory spending. The OECD’s analysis suggests that mandatory spending should be reviewed regularly, included in fiscal rules and budget processes, and be subject to clear accountabilities to parliament.
Mandatory spending in budgeting in selected OECD countries
