Medium Term Expenditure Framework: What is it?

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Medium Term Expenditure Framework What is it?

• PREM Week Thematic Session
• Washington, DC
• November 21, 2000
• Vinaya Swaroop
• 
  
  

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What is a MTEF?

• A tool for linking policy, planning budgeting
  over a medium-term ( 3 years) at the
  Government-wide level
• It consists of a top-down resource envelope a
  bottom-up estimation of the current medium-term
  costs of existing policies

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What is a MTEF?

• Matching of the two in the context of the annual
  budget process and
• Involves rolling over this exercise every year
  by incorporating policy changes.

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What can it do?

• If successfully applied, it can
• Improve macroeconomic balance by developing a
  multi-year resource framework (expenditure
  revenue)
• Assist in improving resource allocation between
  across sectors

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What can it do?

• Improve predictability of funding for line
  ministries.

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What it does not do?

• MTEF is about budget planning given policy
  choices
• It does not tell you about what public spending
  is buying (i.e., the link between inputs
  outputs) and
• It is not about accountability (i.e., how are
  resources being spend).

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A Checklist on MTEF...

• Can the country do a reasonable 3-year
  projections of expenditures revenue?
• Is the bottom-up exercise of 3-year cost
  projections (capital recurrent programs
  subprograms) feasible?

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A Checklist on MTEF...

• If the capacity does not exist, what would be a
  sequenced process of building it?
• What country preparations are needed before a
  MTEF could be successfully adopted?

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A Checklist on MTEF...

• Last but not least A MTEF will not solve all
  the service delivery problems.

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• ...Several managers called for annual budgeting
  within a multi-year framework to remove budget
  uncertainty and improve the operating
  environment
• Corporate Day at the World Bank focused on
  strategy budget discussions, Nov. 3rd, 2000