This paper deals with expenditure inflexibility, which nas a crucial bearing on the fiscal latitude which the government has in the preparation of the Finnish state budget. The government`s fiscal latitude, i.e., the possibilities available to the government to increase, decrease of change state expenditures is restricted by various mechanisms. The source material used in this study consists of budget documents and interviews with officials involved in prepraring the budget; use was also made of earlier studies relating to this subject. Our major findings fall into three groups. (i) if the degree of inflexibility is used as a basis for classification, four classes of expenditure can be identified in the Finnish state budget: expenditure controlled by statute, expenditure controlled by aggrement, expenditure controlle by authoriztion and expenditure withouth formal control. (ii) In the budget for 1996, 92 percent of expenditure was controlled in various ways, leavin only 8 per cent that was flexible. The conclusion can be drawn from this that without changing the mechanisms that bind expenditures, the governament`s ability to alter fical policy in the budget of a single year is very limited. In the 1990s the proportion of statute-controlled espenditures has decreased and the proportion of agreement-controled and authorization-controlled expenditures has increased. Nevertheless fiscal latitude hs grown. (iii) The material used for comparison showed that ther is similar problem in other countries, but that the mechanisms governing expenditure inflexibility and the fiscal latitude that governments may enjoy can vary