The Reality of Budgetary Reform in OECD Nations

The Reality of Budgetary Reform in OECD Nations

Trajectories and Consequences

Edited by John Wanna, Lotte Jensen and Jouke de Vries

The Reality of Budgetary Reform in OECD Nations investigates the impacts and consequences of budgetary reform through a comparative assessment of advanced Organisation for Economic Co-operation and Development (OECD) democracies that have undertaken budget reforms over the past two to three decades.

Chapter 9: Budget Reforms in Denmark: Unheralded but Nevertheless Effective

Lotte Jensen and David Fjord

Subjects: economics and finance, public finance, public sector economics


Lotte Jensen and David Fjord* Budget reforms? We haven’t seen any since the 1980s. (Ministry of Finance Official) The epigram of this chapter captures the reaction of experienced budget specialists when asked to describe the trends in Danish budget reforms over the past 20–30 years. If budgetary reform is system-wide, comprehensive or programmatic, and aimed at transforming the principles by which the system as a whole operates, then it has been rare in Denmark. There has been only one explicit reform program, simply referred to as ‘the budget reform’ in common parlance. It occurred in the mid-1980s and is the last example of such a reform. It also constituted the only occasion when the budget system was systematically and publicly scrutinized (BRU 1983) and the only occasion where politicians were engaged in defining and promulgating reforms to the budget system. Denmark’s narrative of budget reform suggests that a severe economic crisis, and change of government in 1982, led to a brief period of budget reform in the mid-1980s, tailored specifically to strengthen aggregate fiscal discipline via fixed targets, top-down processes and enhanced leadership responsibility at ministry and agency level. The reform elevated the Finance Ministry from a sidelined position to the center of government decision-making. After the next regime change in 1993 back to a social democratic government, the interpretation of crisis management changed; Keynesian fine-tuning was reintroduced, but in a firmer variant than in the 1970s. Expenditure politics receded to the back-burner and the attention of Finance drifted...

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