The Global Financial Crisis and its Budget Impacts in OECD Nations Fiscal Responses and Future Challenges
Fiscal Responses and Future Challenges
Edited by John Wanna, Evert A. Lindquist and Jouke de Vries
Chapter 12: Readiness, resilience, reform and persistence of budget systems after the GFC: conclusions and implications
Our previous book, The Reality of Budget Reform in OECD Nations: Trajectories and Consequences (Wanna et al. 2010), explored the trajectory of budget systems and reform in several Organisation for Economic Co-operation and Development (OECD) countries during the early to mid-2000s. The study was in progress just before the global financial crisis (GFC) hit most governments and markets of the developed economies. In the conclusion to that book, John Wanna ventured these observations about how the 2007–09 global financial crisis might affect government budgeting, their ability to respond to challenges, and reform trajectories. He suggested: the onset of the global financial crisis – with its associated fiscal implications for governments – does not imply budgetary mismanagement or that the reform trajectories of the previous decades have been undermined. Arguably, most OECD nations were in a much better position to withstand the financial crisis precisely because they had put their budgetary houses in order over the preceding period. The changes in fiscal conditions brought on by the crisis, and the political imperatives to spend as a means of stimulating their economies, will undoubtedly see all OECD nations incur greater levels of debt than they enjoyed in the mid-2000s. This will place additional constraints on annual budgets into the foreseeable future, especially as interest repayments grow as a proportion of annual expenditures. (Wanna 2010: 296–7).
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