OECD - Corona put national budgets under pressure

The corona crisis has put the budgets of the OECD countries under great pressure. The national debt ratios widened significantly. In 2020 Austria saw the fifth largest budget slump among 26 OECD countries, and household expenditure also rose. Most states would have responded quickly to the pandemic, but could have been better prepared, the organization said. Now, above all, the people's trust in their government must be maintained.

During the crisis, governments often introduced emergency regulations, often in a fast-track process. A "softening of the standards" was inevitable, "but the scope and duration of special measures must remain limited," said the press release on Friday. Otherwise public trust in the competence and transparency of the governments threatens to be lost.

"In the coming period we have to keep an eye on both: the economic recovery as well as securing trust in democratic institutions," said the head of the OECD Public Governance Directorate, Elsa Pilichowski. In most countries, confidence in the government increased in 2020 compared to 2007, but continued to decline over the course of 2020, according to the OECD. In Austria, 63 percent of those surveyed said they had confidence in their government in the previous year. This puts the country well above the OECD average of 51 percent, but lags behind Germany (65 percent) and Switzerland (85 percent).

Strengthen democracy

“Strengthening democracy should be one of our top priorities,” said Pilichowski. Above all, this means preventing misinformation, promoting participation and diversity in the population and giving underrepresented groups a greater say in public life. In addition, governments must strengthen their ability to act in crisis situations. In 2018, only half of all OECD countries had their own public body that was tasked with identifying new and complex crisis situations.

Another lesson from the crisis is that states have to learn to use their financial resources more efficiently. According to the study, government spending and, as a result, budget deficits rose significantly in the crisis year 2020. In Austria, the national debt ratio widened from 89 percent of gross domestic product (GDP) in 2019 to 110 percent in 2020, and the budget deficit reached a record level of minus 8,9 percent of GDP. In 2019 there was a budget increase of 0,6 percent. Austria recorded the fifth largest budget slump among the 26 OECD countries for which comparable data were available. Household expenditure in Austria has also increased significantly. These rose from 49 percent of GDP in 2019 to 58 percent of GDP. The OECD average of 41 percent in 2019 was significantly lower. In all of the countries examined, spending increased in 2020.

With regard to the study, the NEOS see a great need for reform and savings potential in Austria. Austria is lagging behind, particularly in the field of digitization in the public sector. “Unfortunately, the Austrian government is at the bottom of the list when it comes to digitization. Access to data is underdeveloped in Austria, the federal, state and local governments are not pursuing any coordinated digitization or data strategies, ”said NEOS economics and health spokesman Gerald Loacker in a statement to the APA. In an OECD comparison, Austria was below the OECD average for the “Digital Government Index” in 2019.

The OECD publishes its study "Government at a Glance 2021" ("Government at a Glance 2021") every two years and compares the administrative and government actions of OECD and partner countries in areas such as public finances, employment, budget preparation, digitization and public services . (apa)