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Budgeting in a time of austerity: the case of the Estonian central government
Ministry of Finance, Estonia.
University of Tartu.
Kristianstad University, School of Health and Society. (Avdelningen för Ekonomi)
2012 (English)In: Public Administration and Development, ISSN 0271-2075, E-ISSN 1099-162X, Vol. 32, no 2, 181-195 p.Article in journal (Refereed) Published
Abstract [en]

Resulting from the global economic crisis, high budget deficits and debt burden characterise many economies looking for an exit strategy from current fiscal unbalances. The government of Estonia, having pursued a conservative fiscal policy for over a decade, reacted to the economic recession with radical budget adjustments, the latter constituting approximately 9% of gross domestic product in 2009. Consequently, Estonia took its chance and qualified for the euro in 2011. This study examines the behaviour of the Estonian central government and the basis of its budget decisions when planning drastic cost reductions through the theoretical lens of cutback management. The foremost results reveal that the crisis pushed the government to establish a different institutional framework that facilitated fast and effective decision-making during the budget process. The savings proposals came from the Ministry of Finance; however, running a cash-basis line-item budgeting system in practice, the centre possessed only limited performance data for developing the proposals. Consequently, the long-term impacts of the budget adjustments had not been assessed and are as yet unknown. A further conclusion is that the current budgeting framework should be revised and replaced step by step with a more advanced approach.

Place, publisher, year, edition, pages
2012. Vol. 32, no 2, 181-195 p.
Keyword [en]
budgeting, central government, crisis, Maastricht criteria, financial sustainability, Estonia
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hkr:diva-9255DOI: 10.1002/pad.1611ISI: 000302613000004OAI: oai:DiVA.org:hkr-9255DiVA: diva2:524624
Available from: 2012-05-03 Created: 2012-05-03 Last updated: 2012-05-03Bibliographically approved

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Grossi, Giuseppe
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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf