Skip to main content
European Commission logo
enen
Strategy and policy
Reform Support

Supporting the implementation of spending reviews in Portugal

Supporting reforms to ensure efficient and effective revenue administration and public financial management

Funding Programme
Year
  • 2023

Supporting the implementation of spending reviews in Portugal

This project made use of OECD best practices and peer-to-peer knowledge exchange to help the Portuguese government improve its spending review framework. Funded by the EU’s Technical Support Instrument (TSI) programme, it delivered  a technical report with recommendations and an action plan to improve Portugal’s spending review framework, practical manuals, capacity building workshops and on-the-ground implementation support missions. 

Context

Portugal has conducted spending reviews since 2010, when it was involved in an IMF adjustment programme that required their adoption. Despite early successes, spending reviews had not delivered expected results before the start of this project. Challenges to their successful implementation included a complex and flawed spending review process; weak oversight and monitoring; and a lack of participation from line ministries. The Ministry of Finance recognised that addressing these issues was crucial, notably to comply with Country Specific Recommendations and meet Portuguese commitments to the EU’s Recovery and Resilience Facility regarding spending reviews. Thus, in October 2022, they requested technical support through the EU’s TSI programme. 

Support delivered

The OECD provided a variety of support activities between May 2023 and October 2024, both remotely and in Lisbon, which were funded by the EU’s TSI programme. Firstly, a technical report and a related action plan on strengthening Portugal’s spending review framework was produced. Secondly, on-the-ground missions were organised to aid with the implementation of said action plan. Moreover, practical manuals and capacity-building activities such as training and workshops were jointly organised with the Ministry of Finance. Lastly, a final report, summarising progress made and areas of future focus, was produced. These activities supported Portugal in implementing its commitments under the EU’s Recovery and Resilience Facility.

Outputs achieved

During the project, the Ministry of Finance conducted two spending review rounds under the newly established spending review framework, underpinned by the manuals produced. Foreseen savings have been estimated at €84m in the first spending review round, and €163m in the second (GPEARI, 2024, 2024-2025). The scope of spending reviews increased from 2% to 7% of Central Administration expenditures between the first and second rounds (ibid.). More generally, the Ministry of Finance has made significant progress in the implementation of the OECD’s action plan. Of the 17 recommendations, 9 have been fully completed. This includes 7 out of 9 short-term recommendations. The remaining 6 recommendations are mostly for the medium to long-term.

The Ministry of Finance, represented by GPEARI, acknowledges that the project supported the Ministry in achieving the milestone TD-C17-r32-17.5 (Implementation of mechanisms to integrate spending reviews in the regular budgetary process, including the ex-post evaluation of efficiency savings by Q4 2024) of the Portuguese RRP.

 

The project's success has also been recognised by independent national and international entities such as the Court of Auditors and the IMF:

  • “The third expenditure review experiment in Portugal, which began in the third quarter of 2023, is currently underway. There is not yet a sufficient factual basis for an overall assessment, since most of the policy options will be implemented throughout 2024 and will take effect in the following years. Even so, it is more in line with international best practice as it has received technical support from the Organisation for Economic Cooperation and Development, which intervened under the European Commission's (EC) Technical Support Instrument (TSI)”. In, Tribunal de Contas, Auditoria ao Exercício de Revisão da Despesa (Spending Review), Relatório n.º 3/2024 2.ª SECÇÃO, junho de 2024.
  • “The integration of spending reviews into the budgetary process and the recent enhancements of the information system are welcome and should continue, while the 2015 Budgetary Framework Law needs to be fully implemented (now slated for 2026) to improve spending efficiency”. In IMF Country Report No. 24/308 released in October under Article IV of the IMF’s Articles of Agreement. 

Useful links

More about the project

You can read the documents related to the project here: