Budgeting Procedures and Democratic Ideals: An Evaluation of Swedish Reforms

The choice of rules for the central government budget process represents a trade-off between potentially conflicting goals. Budgetary reforms triggered by serious imbalances in public finances over the last two decades indicate that a political reorientation has taken place, giving more emphasis to macroeconomic impacts, long-term budgetary restrictions, and transparency in budget decision making. The paper analyses a number of generic problems of collective decision-making in the fiscal policy area and their relation to fundamental values upon which democratic states are built. The discussion is illustrated by experiences from a major budget process reform in Sweden between 1992 and 1997. The conclusion is that tighter fiscal discipline can be achieved without encroaching upon democratic values; it is argued that democracy can in fact be strengthened by such a shift of regime.