Sustainability of public finances in OECD countries

Governments across the OECD are facing a dual pressure challenge: the need to reduce budget deficits while emerging pressures increase the financial demands on governments. Expenditure rigidity – the limited ability to reallocate resources across programmes – compounds fiscal pressures. Drawing on recent experiences in OECD countries, this paper looks at how governments are starting to respond to this challenge. It highlights how fiscal tools such as medium-term budgeting and spending reviews could better contribute to fiscal consolidation efforts. The analysis suggests that consolidation can no longer be treated as a one-off exercise – instead, it should evolve into a broader, ongoing exercise of state redesign, building systems that allow for continuous expenditure reprioritisation.