Design and implementation of spending reviews in Colombia : a case study and recommendations(complete note)

Spending reviews offer a valuable tool to identify structural savings, while promoting the efficiency and effectiveness of public investment. Several OECD member countries have implemented such reviews since the last decade and particularly in the aftermath of the 2008 financial crisis. The tight fiscal and expenditure constraints resulting from the crisis led many countries to resort to spending reviews as a pivotal tool in its fiscal consolidation efforts. Since the pioneering implementation of spending reviews in Canada and the United Kingdom during the 90s (Stacey, 2015), Australia, France, and Ireland, among other OECD countries, have carried out similar works. Likewise, the World Bank Group (WBG) and IMF have recently carried out pilot spending reviews in Croatia (Madzarevic-Sujster and others, 2015; and Olden and others, 2015) and Poland (Holda and Skrok, 2015). In the case of Colombia, spending reviews were recommended by the 2013 OECD Public Governance Review as a mechanism to improve the linkage between strategy and budgeting as well as a prioritization tool for the allocation of fiscal space. In this context, Colombia’s National Planning Department (NPD) requested WBG support to develop and implement a spending review methodology. The methodology had the objective of identifying potential savings resulting from efficiency gains by reallocating budget from low-priority or low-performing public investment initiatives toward high-performing projects, or carrying out focalized cuts depending on the fiscal situation. The WBG support also sought to generate institutional capacity at the National Planning Department and sector-level institutions by training staff in the implementation of the methodology so that it could be replicated in future exercises.