Budget execution and “December fever” in the public sector: Can we improve it?

Abstract

One of the characteristics of the budget execution of public agencies is that they concentrate spending in December. As there is concern that the "December fever" implies inefficient, inadequate or incorrect spending, formulas have been sought to deal with it. In 2019, through the mechanism of remuracional incentives, an indicator was established to reduce the level of spending in December, asking public agencies to set goals. The results of the study show that this tool produced mixed results. Although most of the organisms reached the established goals, there are two observations. The first is that the goals were set within achievable ranges and with minimal risks of non-compliance. This accounts for gaming practices, essentially because the indicator did not set parameters for setting goals such as historical levels of execution. The second is that the indicator, by not including any parameter for the level of spending in the months prior to December, allowed that, rather than achieving an adequate budget execution during the year, the agencies transferred the higher spending from December to the month of November. The indicator allowed the “December fever” to decrease, but that of November increased.