efforts to redirect public expenditure towards prioritised items. Thus, several studies (e.g. the one on
Germany) emphasise the importance of long-term structural reform programmes that allow a steady and
sustainable decline in expenditures commitments. However, a temporary problem is that such reforms
could induce additional costs in the short run, while they would yield positive effects for potential growth
and sustainability in the long run.
Another topic of the case studies is the role of fiscal institutions in improving public sector efficiency. To
raise public sector productivity in Italy, the paper identifies the need for institutional improvements. The
2007 Financial Law includes reforms in four areas: (i) a spending review, (ii) reform of the budget
transparency and accountability through budget reclassification, (iii) re-examination of parliamentary
procedures and (iv) the use of performance-based budgeting. The paper on the United Kingdom lays out
in detail the new public spending framework that was adopted in 1997 with the objective of improving
the quality and cost-effectiveness of public services. One main focus of the framework has been a shift
from input to outcome orientation. At the same time there has been more medium-term orientation as
part of the medium-term budgetary framework, including the year departmental expenditure limits. The
case study on Spain discusses the role of the law of Budgetary Stability and the paper on the Czech
Republic describes the introduction of fiscal targeting and medium-term expenditure frameworks.
Broader issues of fiscal governances are tackled in a number of papers in Section III.