This presentation was made by Raymond Bausch, Luxembourg, at the 12th Annual Meeting on Performance and Results held at the OECD, Paris, on 24-25 November 2016

1. 1
Recommandations
based on the Spending Review 2014 in Luxembourg
Raymond Bausch
raymond.bausch@igf.etat.lu or +325 247 82748
Inspecteur des finances dirigeant
Inspection générale des finances, Luxembourg
Paris, le 25 Novembre 2016
OECD – SBO-Performance and Results

2. 2
Inspection générale des finances
Recommandations
based on the Spending Review 2014 in Luxembourg
Recommandations based on the Spending Review 2014 in Luxembourg
1. The Context
2. The Spending Review 2014
3. The Principles
4. The Outcome
5. Recommandations

3. 3
1. The Context
• In December 2013 a new Government started its work
• Due to changes in European VAT regulations on E-Commerce
a decrease of 1.000 millions euros (~1,7% of GDP)
in tax revenues was foreseen until 2018
• Spending Reviews done in UK, France and Netherlands were
analysed
• The 2014 Spending Review was announced in February 2014
with a deadline of October 2014 to announce the results
Inspection générale des finances
Recommandations
based on the Spending Review 2014 in Luxembourg

4. 4
2. The Spending Review 2014
• 4 Phases:
– Design phase: from February to March
– Preparation phase: from March to June
– Decision and consultation phase: from June to September
– Implementation phase: from September onwards
• Managed by the Finance Minister assisted by the Finance Ministry and the
Inspection Générale des Finances (IGF)
• 20 Working Groups proposed in June saving initiatives under the responsability of
their Line Minister
• In October the Government announced 258 measures selected among the
proposals and 2 additional tax measures:
Inspection générale des finances
Recommandations
based on the Spending Review 2014 in Luxembourg
(in thousands of euros) 2015 2016 2017 2018
A package of VAT measures (increase in the rates from 15% to 17%,
from 12% to 14%; increase of reduced rate of 3% to the standard rate of
17% for the purchase of second homes, …)………………………………… 250.220 368.745 394.775 421.500
Introduction of an « impôt d’équilibrage budgétaire temporaire de
0,5%»………………………………………………………………… 80.000 100.000 109.000 119.000

5. 5
3. The Principles
• Nothing was excluded
• Non Veto Principle was applied
• Help from external consultants or Secretariat was available
• Strict confidentiality was required during the process
Inspection générale des finances
Recommandations
based on the Spending Review 2014 in Luxembourg

6. 6
4. The Outcome
Ad hoc, across-the-board cuts have been avoided.
On the contrary, the Spending Review has made it possible to:
1. root out financial waste in a technical manner
2. reallocate public funds
3. store ideas for savings, keeping them available in case of
need
Inspection générale des finances
Recommandations
based on the Spending Review 2014 in Luxembourg

7. 7
4. The Outcome
• October 2014 Announcement:
• August 2016 Progress Report to Parliament:
• Most important result:
A general saving attitude of
spending less than foreseen in all the budgets wherever possible
Inspection générale des finances
Recommandations
based on the Spending Review 2014 in Luxembourg
(en millions d’euros)
Administration publique 2015 2016 2017 2018
258 mesures retenues :
- Volet dépenses 168,9 327,9 405,5 463,4
- Volet recettes 22,8 41,3 46,2 46,2
- Total 191,7 369,2 451,7 509,6
Augmentation TVA 249,2 368,7 394,8 421,5
Contribution pour l’avenir des enfants 119,0 130,0 130,0 130,0
Total des mesures 560,9 867,9 976,5 1.061,1
(en millions d'euros)
Administration publique
2015
Compte
2016
Prév.
2017
Prév.
2018
Prév.
2019
Prév.
2020
Prév.
258 mesures retenues de la révision des dépenses 183 227 265 369 397 451
Augmentation TVA (sans logement) 206 303 317 330 343 343
Impôt d’équilibrage budgétaire temporaire 84 100 15 5 2 2
Total des mesures 473 630 597 704 742 796

8. 8
5. Recommandations
• Use some pressure :
– Timing, Amount to save, Across-the-board cuts in case of unsufficient
initiatives, …
• Don’t lose time to describe the existing situations
• Listen to the right experts
• Ask for more proposals than needed
• No measure is too small to be rejected
• Keep the ownership of the measures with the Line Ministries
• Take fair decisions
– Do not punish the groups with many proposals
• Don’t forget the implementation phase
• Allow for replacement measures in case of implementation problems
• Don’t apply the same approach too often
Inspection générale des finances
Recommandations
based on the Spending Review 2014 in Luxembourg