By Judith Ugwumadu | 1 April 2014
Spain must focus its public finance reform on budgetary issues, the Organisation for Economic Co-operation and Development said today after a review revealed gaps in the government’s fiscal plans.
Public sector reforms were on the right track, the OECD said in an examination of the country’s Commission on Public Administration Reform (CORA) agenda but needed to be viewed as an ongoing project, not a one-off exercise.
‘Few countries have placed the strengthening of public institutions so high on their agendas,’ said OECD secretary-general Angel Gurría, presenting the review in Madrid.
‘The CORA reform is a way for Spain to restore public trust in institutions and ensure it comes out of the crisis with a more effective, transparent and efficient public sector that is adapted to the challenges of the 21st Century. This is a critical step in Spain’s efforts to build a future of strong, inclusive growth.’
A main focus of the OECD’s Public governance review of Spain: from administrative reform to continuous improvement report was to identify potential links, both within the CORA agenda and with other reforms under way on public financial management, transparency and integrity.
To promote continuous improvement in public management the OECD laid out some proposals to increase transparency and root out corruption to restore public trust. It highlighted better regulation, budgeting and human resource management as areas that could contribute to Spain’s ongoing development.
Spain’s current public finance package puts forwards measures to improve budgeting, such as the introduction of a new technique to budget for operational expenditures in the central administration and the creation of an independent fiscal institution.
These changes would promote transparency and efficiency in the allocation of public resources and would help restore the credibility of public finances and reinforce its sustainability in the long run, the OECD review stated.
‘Although the current reform agenda does not intend to go over the whole budget-making process, it offers additional opportunities to reconcile fiscal sustainability, government effectiveness and fiscal transparency in Spain,’ said the OECD.
‘Budget is a very powerful tool of public management that should be fully used to support state reform.’
Other budgeting recommendations included: consolidating top-down budgeting by making the spending framework more predictable; strengthening the credibility of multi-year financial frameworks by using them to anticipate fiscal space constraints and prompt early decisions; building the generation of fiscal space into the budget process by establishing regular spending reviews; and developing robust budgeting practices at the sub-national level by creating incentives for regional and local governments to meet fiscal targets.
Overall, the review praised the fact that Spain’s reform plans were geared towards boosting growth and productivity rather than only cutting costs or reducing headcount.
Finally, it noted that Spain’s high degree of decentralisation made it important to take a ‘whole-of-government’ approach to ensure adequate co-ordination and integration.
