1. 1 Highlights of Gaps in the Preparation of MTBF/MTFF/MTEF Governments in Africa introduced: The Medium Term Budget/Fiscal/Expenditure Frameworks (MTBF, MTFF, MTEF) process as way of improving allocation of scarce resources between ministries Link policy, planning and budgeting Enhance delivery of planned outputs Promote a culture of increased transparency, accountability and performance But in-spite of these approaches, there are glaring gaps in the frameworks of the Countries in the region which need to be addressed. COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks

2. I.Gaps in Medium Budget Frameworks  Lack of standardised processes and systems that provide uniform and meaningful information to Ministries of Finance/National Treasuries in setting ceilings  Inadequate support and commitment from senior management, members of parliament and ministers to reforms.  Inadequate training; i.e. not continuous leading to no real progress in the implementation of budget reforms.  Lack of user friendly presentation of budgets that clearly show performance and accountability COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks2

3. Gaps in Medium Budget Frameworks Contd’ Insufficient focus on ensuring that the budget process is used to improve efficiency and effectiveness of budgets through improving budget implementation, monitoring and evaluation Governments have introduced computerised financial management information systems (IFMIS) which do not fully support either the MTEF or performance based budgets (as they are mostly spread sheet based) There is not a sufficiently strong link between the financial information in the IFMIS and performance information developed through the MTEF - Systems do not support the use of performance information in the budget implementation, monitoring and evaluation COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks3

4. 4 Highlights of Gaps in the Preparation of MFF and MTEF There are a number of issues and challenges that governments face: Inadequate data; sources, timelines, credibility, use of old data on National Accounts External pressure to provide an over optimistic estimate in order to accommodate expenditures External shocks; assumptions largely depended on external parameters which are prone to change COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks

5. Highlights of Gaps in the Preparation of MFF and MTEF Weak predictability of the fiscal frameworks. The revenue and expenditure thresholds are volatile as a result of the assumptions underpinning the frameworks. There is significant variance between planned and actual targets; Un reliability of forecasting of the Outer years; Challenges in accommodating external resources Reallocation of the expenditures COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks5

6. Highlights of Gaps in the Preparation of MFF and MTEF National Development/Policies associated with political regimes, this changes with change in Government. Hence risk of distorting the medium link with resource envelope Poor linkage of Policy, National Development Plans and those in the Annual Budget. For example in Zambia there is no mechanism for effective alignment of the national budgets to the national development plans. In Kenya the Sector Working Groups have little influence on the policies that are finally appropriated; Duplication of Government functions leading to thin allocation of the scarce resources; Weak capacity of MDAs to articulate, their mandate, planned programmes and their measurement COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks6

7. Highlights of Gaps in the Preparation of MTEF Weak medium term perspective which is the very essence of MTEF, thus little attention is paid to the 2 outer years of the MTEF. Weak Stakeholders participation ( the expectations of stakeholders not met mainly due to resource constraints, no formal mechanisms for stakeholders engagement usually on adhoc basis; Political Interference; changes by Parliament on BPS, Budget without consideration of medium term outlook Unrealistic forecasts Sudden change of strategic priorities of Government COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks7

8. Highlights of Gaps in the Preparation of MTEF Challenges of defining good performance indicators and activities as the basis for policy, planning and budgeting; MTEF are becoming routine, “business as usual”, rather than tools of enhancing the linkage of policy, planning, budgeting, service delivery and value for money; Lack of fiscal discipline Extra budgetary expenditures Weak information/depository of projects being implemented COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks8

9. 9 Proposed Solutions to fill in the Gaps Some of the proposed solutions include: Capacity building programmes including comprehensive training on formulation of macro fiscal framework and MTEF Process; Include Change Management in training programmes that focus on changing the culture to increased transparency, accountability and value for money The capacity building should target all the key actors involved in Public Finance ( Top Manager, Parliament, Ministers and the technocrats); Cushion the MTEF with a legal framework; Legislate the MTEF Process and Long Term Development Plans Adoption of simple user friendly processes that support the MTEF, performance budgeting and performance management Capture all capital projects in Electronic Project Information System (e-promis), public sector investment programme All donor projects/support must be approved by the MOF COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks

10. Proposed Solutions to fill in the Gaps Maintain a sound base line to enhance projections Involve politicians throughout the process; Develop a macro-economic revenue and expenditure models; Instilling a sense of performance orientation across government by ensuring an enabling environment for PBB with good sequencing of reforms; Restructuring the budget using a programmatic approach and including performance information in the budget documentation; COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks10

11. Proposed Solutions to fill in the Gaps Encouraging debate within the Ministry of Finance, Line Ministries, and other Stakeholders. Enhance transparency, accountability and open communication and consultation; Review the functions of functions of Govt. to eliminate duplication and wastage of resources; Budget approvals be done on Medium term basis Strengthen oversight and governance to promote fiscal discipline Include only agreed donor commitments in estimation of revenue. Any budgetary support thereafter could be used o reduce the overall deficit COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks11

12. Conclusion From the presentations, discussions, highlights of the gaps in MTBF, MTFF, and MTEF and the proposed solutions it suffice to say that Political commitment to budgeting and financial management reform is a must Need a simple framework and transparent norms Comprehensive implementation of PFM reform matters Convince stakeholders about its seriousness 12 COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks

13. Conclusion Strong commitment of the National Treasury and responsibility for reforms Building capacity on demand and support its development COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks13

14. Way Forward Undertake targeted capacity building program which is responsive to the underpinning challenges; Public Finance Management Reforms should be anchored in law so as to support macro economic stability, equity in distribution of resources, consistency in Government development agenda; Learning and Experience sharing for member states where issues/reforms related to public finance are shared. This will provide a platform for peer reviews; COMESA Monetary Institute Workshop on Medium Term Fiscal Frameworks14