Flexibility and Adjustment in Public Budgeting: The Netherlands Experience

This article deals with the flexibility of public expenditure, or perhaps the lack of it. Inflexibility finds its roots in the establishment of public services, their expansion and development. Therefore, in this article the structure and development of the public sector is discussed. In many western countries the largest part of the public sector consists of transfer expenditures. These statutory programs are directly affected by economic development, cyclical and structural. That is why attention is directed here to the relationship between the economic situation and perspective on the one hand and the public sector on the other. These are also a reflection of the sociological and political development of the society in question. This is a relationship that is difficult to examine in terms of managing expenditures. In addition, inflexibility is a product of the public services provided, and certain methods, such as multiyear budgeting, can further enhance inflexibility. In the last part of this article, methods to create more flexibility in public expenditure are discussed. Experience with new budget techniques to enlarge flexibility is considered.