Presentation on theme: "The Medium Term Expenditure Framework"— Presentation transcript:
1 The Medium Term Expenditure Framework Malcolm Holmes
2 Three Levels of Expenditure Outcomes Aggregate Fiscal DisciplinePrioritization of the Composition of ExpendituresTechnical Efficiency in the Use of Budgeted Resources
3 Some PrinciplesTransparency and accountabilityComprehensiveness of budgetPredictability of resources & policiesFlexibilityContestabilityExistence and sharing of information
4 Fragmentation/Lack of Comprehensiveness Across:Policy Making, Planning, BudgetingFiscal activitiesTypes of expenditureSources of fundsTimeInputs, outputs and outcomes
5 Enabling Environment for Public Sector Link Policy, Planning, BudgetingRestrain decision making:affordabilitycost, expected resultsevaluateForum within which policies competeCapacity and willingness to reprioritize and reallocate.
6 Characteristics of Sound PEM Commitment, capacity & willingness to:Prepare a budget (a) in line with development priorities and (b) that can realistically be implementedSpecify the budget’s intended resultsexecute budget as passed by the legislatureAccount for results achievedEvaluate impact of policies and programs and take results into account in budget preparation.
7 A Contract for Performance The CenterMore predictable fundingMore predictable policySpecifying expected performanceGreater transparency and predictability in processes for reprioritizing and reallocating resourcesLeave management decisions to line managers
8 A Contract for Performance The LineLiving within budgetClear sector strategiesUsing resources efficiently and effectivelyReporting on resource use
9 Using a Medium Term Expenditure Framework Fiscal Targets (what is affordable)Forward Estimates of Existing PolicyInstitutional Mechanisms for Making the Trade-offsA Focus on PerformanceEnhanced Predictability
10 Ensuring Better Resource Planning MTEF provides structure that:Disciplines policy choices within realistic constraintsTranslates longer-term priorities into funded programs and activitiesLinks policy and spending choices with expected impact and costsImproves predictability of policy and funding
11 Better Resource Planning Reflected in:Matching of spending with overall resource availabilitySectoral spending coordinated with government-wide prioritiesImproved sector planningIncreased effectiveness and efficiency of spending
12 7 Steps in Preparing an MTEF (Re)estimate the resource envelopeDefine medium-term sectoral resource limitsPrepare sector programsReview the sector programsSubmit revised limits to the CabinetFinalize the budget and present it to ParliamentReview and Rollover
13 1: (Re)estimate the resource envelope Forecasts of economic performance3-5 year perspectiveDerive domestic revenue estimatesForecast development assistance flowWhat actors are involved?
14 2: Define medium-term sectoral resource limits Costs of existing policies and programs--committed, contractedSectoral priorities of governmentAdjust baseline to reflect strategic priorities and existing policies/commitmentsSubmit to Cabinet prior to beginning of budget cycleWhat actors are involved?
15 3: Prepare sector programs Medium-term strategic plan by sectorObjectives, outcomes, outputs and activitiesExpenditure forecastsIdentify changes in ongoing and new programsDefine spending by programs and objectsWhat actors are involved?
16 4: Review the sector programs Review and improving quality of sectoral effortsfocus on broad strategic issuesVerify consistency between sectoral and government-wide objectives and spendingVerify costs over medium-termAssists sector in realigning spending in case estimate exceeding ceilingsWhat actors are involved?
17 5: Submit revised limits to cabinet MoF proposes multiyear limits on sector spendingPresent for Cabinet approvalCabinet decision forms the basis of detailed budget proposalWhat actors are involved?
18 6: Finalize the budget and present it to Parliament MTEF budget proposal provides framework for line agenciesLine agencies prepare budget submissions to MoFInclude indicative allocations/limits for medium-termMoF reviews and aggregates agency submissionsConsidered by CabinetPresented to ParliamentWhat actors are involved?
19 Maintain existing spending estimates 7: Review and RolloverMaintain existing spending estimatesRevise according to policy or parameter changes at specified pointsBegin next budget cycle using updated estimatesConsider changes in government-wide priorities(Re)estimate the resource envelopeWhat actors are involved?