Improving the Efficiency and Sustainability of Public Expenditure in the Czech Republic

This paper reviews the public expenditure system in the Czech Republic and the scope for its reform. In recent years much progress has been made in improving the transparency and management of government finances. Nevertheless, the budget and policy planning process retains a single-year and inputoriented focus. Moreover, with the recent introduction of a regional level of government and the expansion and proposed introduction of new extra-budgetary funds, the government’s capacity to manage the macroeconomy has been weakened. In this regard, establishing a multi-year budgetary process should be made a government-wide priority. Such a system would allow extra-budgetary funds to be re-integrated into the State Budget. Moreover, it would reduce the potential for expenditure creep and facilitate macroeconomic policy making, as would the establishment of mechanisms for co-ordinating sub-national spending programmes. Such a medium-term budgetary framework should evolve, over time, into a ...