The Introduction of Spending Review into the Budget Process in Germany

Abstract

The article describes Germany’s experience of the new budget technology, i.e. the spending review (SR) procedure. By 2019, it became a permanent and mandatory part of the budget preparation. SR is based on a system of interrelated concepts developed by competent experts of the OECD, the European Commission and the Eurogroup. The SR cycle lasts for one and a half years, starting annually in March and ending in August of the next year. The scope of expenses and line ministries/departments increase with each cycle. SR in Germany is focused on improving the prioritization of expenses; it is the selective one and results mainly in the functional savings. With the implementation of SR, a system of compulsory simultaneous consideration of options for saving the existing expenses and options for accepting the new commitments has been established at the level of top political leadership. This ensures compliance with the maximum limit of total expenses, which is necessary to maintain the stability of state finances.

Keywords

• spending review
• sr
• expenses prioritization
• selective sr
• functional savings
• sr cycle