Top-down Budgeting as a Tool for Central Resource Management

John M. Kim and Chung-Keun Park

OECD Journal on Budgeting, 2006, vol. 6, issue 1, 87-125

Abstract: Top-down budgeting emerged in the 1990s as a response to fiscal crisis. Previously, the traditional bottom-up approach to budget formulation had conferred centralised authority for resource allocation on the finance ministry. Then, in an attempt to control the growing fiscal deficits in the 1990s, the finance ministry only set the overall expenditure ceiling and subceilings, and delegated detailed resource allocation decisions to line ministries. However, the level of delegation and the method of determining the expenditure ceilings vary across countries. This article describes country experiences with top-down budgeting and makes policy suggestions for its use as a tool for central resource management. The article also explores the relative advantages, disadvantages, and complementarities of the two approaches.

Date: 2006
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