The Role of Parliaments in Restoring Public Finances

1. Parliamentary budget oversight in support of fiscal sustainability

Abstract

Public finances across the OECD face mounting pressure from high debt levels and growing spending demands. Addressing these challenges requires effective fiscal governance, with governments, legislatures, fiscal frameworks and independent fiscal institutions each playing distinct roles. This chapter sets out the institutional context for the report, focusing on the role of parliaments in supporting fiscal responsibility. It introduces the OECD Best Practices for Parliaments in Budgeting as the analytical framework for the report and outlines the comparative approach used in the chapters that follow.

Restoring public finances has become a priority for OECD countries. As highlighted in the OECD's Restoring Public Finances: Enabling Effective Government (OECD, 2026[1]), public debt remains elevated following successive crises, while long-term spending pressures continue to intensify. Ageing populations are increasing demand for pensions, healthcare and long-term care. Defence spending is rising amid heightened geopolitical risks. Meanwhile, the fiscal cost of extreme weather events is growing, placing additional strain on public finances. Without action, debt ratios are projected to rise further, narrowing fiscal space and leaving governments facing increasingly difficult policy trade-offs.

This changing fiscal landscape has renewed attention to the strength of national budgeting systems. Technical reforms to fiscal rules, medium-term frameworks and spending reviews remain essential, but experience shows that they are not sufficient on their own. Countries also need institutions that can reinforce credibility, enable long-term planning and support decisions that may be politically difficult yet economically necessary. Strong institutions help sustain reforms over time, anchor expectations and build the public trust needed to manage complex fiscal adjustments.

Within this institutional ecosystem, legislatures have a central role to play. As institutions responsible for approving appropriations, parliaments occupy a unique position at the intersection of fiscal governance, accountability and citizen representation. Their “power of the purse”, long recognised as a cornerstone of parliamentary authority, enables them to scrutinise, influence and legitimise decisions that shape a country’s fiscal trajectory. In doing so, legislatures act as guardians of fiscal accountability, holding governments to account for how public resources are raised, allocated and used. When legislatures are well designed and well resourced, they contribute to more transparent budgeting, stronger oversight and greater accountability. They also provide an essential link between governments and citizens, helping to ensure that public priorities and societal trade-offs are reflected in the budget process.

Whether legislatures are able to perform this role effectively depends not only on their formal powers, but also on access to sufficient technical and analytical support. Independent fiscal institutions (IFIs) can play an important role in this regard by providing independent analysis of fiscal policy, budgetary projections, fiscal risks and long-term sustainability challenges. In doing so, they can help strengthen the capacity of legislatures to hold governments to account and support an appropriate balance between the executive and legislative branches in fiscal decision making.

However, legislatures are not always viewed as champions of fiscal responsibility. Concerns about fragmentation, short political horizons, pork-barrel amendments and incentives for overspending have shaped perceptions of parliamentary budgeting. Risks tend to arise where rules are unclear, information is incomplete or scrutiny is limited to narrow phases of the budget cycle. With the right foundations in place – like clear fiscal rules, strong oversight, and well-structured committees – legislatures across OECD countries can be better equipped to support disciplined, strategic, and sustainable budgeting.

To support effective parliamentary budget oversight, the OECD Best Practices for Parliaments in Budgeting (OECD, 2023[2]) set out a framework through which legislatures can contribute to fiscal responsibility. In supporting fiscal responsibility, legislatures are concerned not only with fiscal discipline but also with how public resources are allocated and used to achieve policy objectives. The Best Practices emphasise early engagement with the fiscal framework, structured debates on priorities and trade-offs, rigorous review of the medium-term outlook, and regular scrutiny of fiscal sustainability and fiscal risks. They also highlight the importance of strong committee systems, including a central budget committee supported by sectoral committees, access to high-quality analytical capacity and opportunities for citizen engagement.

These principles have gained renewed relevance as part of efforts to restore public finances. As highlighted in the OECD’s work on empowering public understanding, long-term sustainability challenges cannot be addressed by technical reforms alone; they also require political and societal buy-in (OECD, 2026[3]). Legislatures have a natural role in building that understanding and creating that buy-in. Through open debate, clear communication and meaningful opportunities for public participation, they can help create the conditions in which difficult fiscal choices become both feasible and legitimate.

This report draws on the 2025 OECD Survey on Parliamentary Budget Oversight to examine how legislatures across OECD countries are organised to perform these functions (see Box 1.1). The survey provides a comparative picture of legislative powers, procedures and institutional arrangements related to budgeting. Given the diversity of parliamentary systems across OECD countries, the report does not seek to identify a single institutional model. Rather, it examines the extent to which existing arrangements are aligned with the principles reflected in the OECD Best Practices for Parliaments in Budgeting.

Box 1.1. Methodological note on 2025 OECD Survey on Parliamentary Budget Oversight

The OECD, through its Committee of Senior Budget Officials and the Working Party of Parliamentary Budget Officials and Independent Fiscal Institutions, periodically surveys member and partner countries on public financial management practices to provide a comparative overview of national budget processes. As part of this work, dedicated surveys on parliamentary budgeting practices were previously conducted in 2011 and 2018.

Data, results and figures presented in this publication are from country responses to the 2025 OECD Survey on Parliamentary Budget Oversight (referred to as “2025 Survey” hereinafter). Responses were received from all 38 OECD Member countries. The 2025 Survey was designed to assess the extent to which national legislatures are in alignment with OECD Best Practices for Parliaments in Budgeting, covering five core themes: fiscal responsibility, budget approval, budget implementation & audit, committee organisation, and analytical resources (see Annex B and (OECD, 2023[2])).

The survey focused exclusively on central or federal parliaments, with respondents being predominantly parliamentary budget officials. Responses draw upon self-reporting and represent the countries’ own assessment of prevailing practices and institutional arrangements as of 1 February 2025. Data collection ceased in July 2025, and a data cleaning process took place from July to September 2025. The process checked for internal and external consistency in the survey responses. During the review process, countries were invited to clarify and verify any substantial changes from the data submitted, including potential inconsistencies. Data from the 2025 Survey, along with previous editions, are available on OECD Data Explorer and on the OECD website through the OECD Budgeting Database, under the Parliament Database section (OECD, n.d.[4]).

This report also includes the 2025 OECD Index on Parliaments and Fiscal Responsibility. While the Index Methodology (see Annex A) allows for cross-country comparison, it is not designed to assess the overall quality or effectiveness of parliamentary budget oversight in individual countries. Legislative powers to review and approve the budget vary according to constitutional arrangements and systems of government, and different institutional models can support effective oversight. Rather than judging the performance of any particular approach, the Index provides a descriptive assessment of alignment with the OECD Best Practices for Parliaments in Budgeting, helping countries identify strengths and opportunities for further development.

By examining institutional arrangements across five key pillars – fiscal responsibility, budget approval, budget implementation and audit, committee organisation and analytical resources – this report provides a comparative assessment of how well OECD legislatures are equipped to meet current fiscal challenges. Strengthening the role of parliaments in supporting fiscal responsibility will be critical to building fiscal resilience, enhancing public trust and ensuring that public finances are put on a more sustainable path.

References

[1] OECD (2026), Restoring Public Finances: Enabling Effective Government, OECD Publishing, Paris, https://doi.org/10.1787/fbcf9161-en.

[3] OECD (2026), The People and the Budget: Empowering Public Understanding of Public Finances, OECD Publishing, Paris, https://doi.org/10.1787/81674d37-en.

[2] OECD (2023), “OECD Best Practices for Parliaments in Budgeting”, OECD Journal on Budgeting, https://doi.org/10.1787/33109e15-en.

[4] OECD (n.d.), Public Finance and Budgets Database, https://www.oecd.org/en/data/datasets/public-finance-and-budgets-database.html.