Medium-term Expenditure Framework Research Articles

Menelisik Omnibus Law Bidang Perencanaan Anggaran

In the context of budget regulations, in 2023, Government Regulation Number 6 of 2023 and Minister of Finance Regulation Number 62 of 2023 were issued which have the omnibus law character. This research aims to examine the omnibus law in the field of budget planning to analyze whether there are substances that have not been regulated, substances that are less in line with other regulations, and substances that from a grammatical perspective give rise to multiple interpretations. The research method was carried out through a descriptive qualitative approach. The research results show that the mechanism for preparing the state budget has not been fully described by the state budget cycle, the preparation of the Medium-Term Development Plan and the Medium-Term Expenditure Framework (from the funding side) needs to refer to the Medium-Term Budget Framework. In addition, the mechanism for calculating the Medium-Term Expenditure Framework has not been fully described. Furthermore, to increase the efficiency of budget allocation, it is best to add, reduce, and or shift the budget ceiling not only at the line ministries level but also need to be done at the national level. The mechanism is carried out through national blocking savings, where inefficient allocations are blocked and savings are made, then when preparing the Budget Allocation, the figures resulting from the national saving are redistributed to priority programs/activities in various line ministries.

INSTITUTIONALIZATION OF FISCAL RULES: INTERNATIONAL AND RUSSIAN EXPERIENCE

Economic instability forces governments to urgently support businesses and the public at the expense of budgetary imbalances. Such circumstances test flexibility of fiscal rules - restrictions on the main budget parameters. They are often suspended, the limit values of their indicators are adjusted, temporary concessions for their use are introduced. Both the introduction of such instrument and its sustainability over time depend primarily on thegovernment and policymakers. At the same time world experience proves that budget restrictions supported by the authorities need a complementing system of adaptation and controlling conditions allowing for a better adaptation to economic challenges and following their original task - to ensure medium-term budget balance while maintaining a conditionally constant level of budget expenditures. The subject in the paper is the institutional conditions for fiscal rules’ functioning. The purpose of the study is to identify the institutional framework used to ensure proper performance of fiscal rules and assess its practical applicability in Russia. Using the methods of descriptive statistical and comparative analysis of international and Russian practice in applying fiscal rules, the authors identify and analyze the list of such institutional conditions as medium-term expenditure frameworks, fiscal councils, correction mechanisms, escape clauses. The results of the study consist in formulated required and sufficient institutional framework for effective fiscal rules. Due to the use of only medium-term budget planning in Russia the remaining three may serve as a guideline for implementing budget restrictions during the current reform .

Achieving Gender Equality and Empowering Women and Girls through Gender Responsive Budgeting in Ghana

Gender inequality extracts enormous economic and human development costs, shifting fiscal policy to close the gaps and gains across societies. Gender responsive budgeting (GRB) is one of the approaches used by governments, international organizations, and civil society groups to promote and influence gender equality. The United Nations Development Fund for Women (UNIFEM) highlights in its 2020 report, that budgets in most countries are gender biased in their conceptualization, formulation, and implementation. In most African countries, and Ghana is no exception, unpaid care and gender differences in roles and responsibilities in household and the workplace are not considered in policy formulation and implementation. This research intends to answer the following questions; how have MDAs complied with GRB? What are the outcomes of implementing GRB in Ghana and what have been the key challenges to effective implementation? Using the qualitative approach with secondary data obtained from documents in some ministries in the Ghanaian public sector, this research attempted to answer the following questions; how have Ministries, Departments and Agencies (MDAs) complied with gender responsive budgeting (GRB)? What are the outcomes of implementing GRB in Ghana and what have been the key challenges to effective implementation? It was observed that Ghana’s constitution supported a strong enabling environment, with an explicit commitment to gender equality and women’s empowerment. The budget through which important national issues are anchored made specific allocations to address issues of women and girls for the years between 2008 to 2020, in the medium-term expenditure framework. This study contributes to academic literature, specifically on the issue of gender equality in the workplace. This study’s results and findings could be used as the reference for other studies and further research on gender equality and women’s rights.

The Allocative Efficiency Analysis of Special Allocation Fund for Road Sector in 2015-2019

Indonesia, as an archipelago, requires connectivity infrastructures to ease mobility and equitable development. However, the current condition has not reflected a decent quality of road infrastructure. The road sector's special allocation funds are the main instrument for financing local road infrastructure development following national priorities. Departs from this, the study analyzes the extent to which the allocation for the Road Sector in 2015- 2019 complied with the Allocative Efficiency principles as part of the public expenditure management (PEM) framework. The research uses a postpositivism approach with primary data analysis (in-depth interviews) and secondary data in literature reviews, regulatory reviews, and descriptive statistics. The study concluded that the 2015-2019 allocation was not optimally in line with priority-based allocations, a weak medium-term budgeting perspective, poor consolidation within the local autonomy, and several contradictions among regulations. Even though there are several weaknesses in the practice of implementing allocative efficiency principles, the Government's strong commitment is reflected in the Cabinet Review annually and the planned issuance of the Presidential Instruction of Regional Roads. This study brought practical recommendations highlighting the need to sharpen priority targets and recipients, adopt the medium-term expenditure framework (MTEF), and regulatory harmonization. In addition, it is essential to revamp the structure of regional capital spending and the need to accommodate roads in the Minimum Standards Services.

The influence of public sector audit digitalisation on local government budget planning: evidence from Brazil

PurposeThis article analysed how data collection systems (DCS) developed by governmental audit organizations (Court of Accounts) affect budgetary planning within local governments.Design/methodology/approachEighteen semi-structured interviews complemented by six time-lagged interviews via WhatsApp were carried out with the actors involved in the preparation and auditing of the Medium-Term Expenditure Framework (MTEF) in Brazilian local governments. Documents such as the structured layouts of Courts' DCS and the publicised MTEF prepared by local governments were also analysed.FindingsThe findings indicate that Courts' DCS structured layouts reduce local governments' budgetary planning autonomy in elaborating their MTEF. It happens as the Courts' main driver is to make MTEF information auditable and not to improve the usefulness of information by governments. As a result, the planning choices of the local governments end up limited, not by the general legislation but by the rules established by the computerized systems of the Courts.Originality/valueThe paper's originality relies on demonstrating that the digitalisation of audit processes ultimately affects local governments' practices through structured layouts for the data collection on MTEF information - that impose rigidity on the budget planning process of local governments. The authors highlight the role of public sector auditing organisations as potential catalysts of reforms; however, this should be considered cautiously since the drivers and motivations of the organisation that sponsors public financial management reforms matter for overall reform effectiveness.

The threshold level of budget deficit and money supply that stabilize inflation in Nigeria

This study evaluates the threshold level of budget deficit and money supply that stabilize inflation in Nigeria spanning 1986 and 2020. The study aimed at determine the threshold level of budget deficit and money supply that stabilize inflation in Nigeria. In Addition, the study applied the Hansen threshold model (1998) to estimate the threshold level. The study employed annual data on budget deficit (proxied by budget deficit as a share of GDP), money supply (proxied by money supply), inflation (proxied by consumer price index) collected from Central Bank of Nigeria Statistical Bulletin, 2020 edition. Based on the findings of our analyses, the study concludes that budget deficit raises money supply and induces inflationary pressure in Nigeria. The study therefore recommends that there is need for the authorities in Nigeria should reduce the cost of governance by reducing overhead and allowance of political office holder in order to reduce budget deficit. The study therefore recommends that government must ensure that yearly budget imbalance does not exceed this threshold in order to mitigate deficit induce inflation. Also, there is the need for government to strengthening public financial management reforms (like Fiscal Responsibility Act, the Medium-Term Expenditure Framework). This will engender fiscal discipline and reduce fiscal deficit over time.

Investment models for the water infrastructure value chain in South Africa: investment measures, needs and priorities

South Africa has a serious backlog in investment for the development and management of water infrastructure. This study aimed to assess the investment measures, needs and priorities for water infrastructure (engineering realities) through the following objectives: (i) the measurement of water infrastructure investments which demonstrate the budgets required; (ii) understanding the current water infrastructure investment needs and priorities, including benefits and limitations; and (iii) the principles and characteristics for alternative and/or innovative measures, sources and/or models for water infrastructure investments and the envisaged effects. The range innovative of investment models for water infrastructure needs in South Africa are wide, i.e., 15 models were identified depending on the project type and overall transaction costs. The existing public provision model continues to characterise much of the water infrastructure investment in South Africa. The research determined investments in strategic water infrastructure systems over more than 20 years (1998/99–2019/20). The correlations between the three investment measures (as share of GDP) were generally negative and not significant, except for between GFCF(GG) + PPI and GFCFCE) + PPI, which was highly significant. Total water infrastructure investments constituted only 0.35–0.74% of GDP for the last ca. 20 years and 3.97–14.35% of total infrastructure investments. The results identified under-investment estimated at 54.023 billion ZAR for the medium-term expenditure framework (MTEF) period of 3 years.

Does the MTEF shape annual budgets in a developing country?

PurposeThis paper explores how the Medium-Term Expenditure Framework (MTEF) conflicts with annual budgeting and how University actors responded to such conflicting demands in a public university in Tanzania, a developing country.Design/methodology/approachThe data for this study were collected from interviews, observations and document reviews. Data analysis processes were guided by the concepts of organizational façades and organized hypocrisy.FindingsThe findings show that while the state required the university to implement the MTEF, budget preparers and managers were concentrating on basic budgeting problems in annual budgeting. As a result of these conflicting demands decoupling occurred, as there were inconsistencies between the talk and actions of actors in MTEF implementation. In response, actors engaged in organized hypocrisy. The talk and actions were organized by developing pro-effective and symbolic layers. The pro-effective layer showed that actors were concentrating on annual budgeting, while the symbolic layer, through the creation of façades, showed that actors symbolically implemented the MTEF.Practical implicationsThe paper suggests that budgetary reforms of governments, Western donors, such as the International Monetary Fund and the World Bank, and bilateral donors should focus on addressing the basic problems in annual budgeting rather than advocating complex reforms that compel actors to engage in hypocrisy and developing façades. Moreover, university management should address basic budgeting problems to avoid budgeting games during annual budgeting.Originality/valueThis is the first paper to employ the concept of organized hypocrisy to investigate the MTEF. By demonstrating the pro-effective layer, the paper responds to the call for investigation of how accounting works in practice (van Helden et al., 2021). Moreover, by presenting the symbolic layer, the paper responds to the call to investigate how facades are created (Michelon et al., 2016). The paper demonstrates how the concept of organized hypocrisy works well with the concept of organizational facades.

Republic of Azerbaijan: Technical Assistance Report-Government Finance Statistics Missions (May 17-21 and July 22-August 4, 2021)

Following the launch of the Caucasus, Central Asia, and Mongolia Regional Capacity Development Center (CCAMTAC) in February 2021, and in response to a request from the Azerbaijani authorities to support their statistical capacity development (CD) in government finance statistics (GFS), a series of technical assistance (TA) missions took place remotely (via Zoom meeting platform) during May 17−21 and July 22−August 4, 2021. Both missions were conducted by Mr. Roderick O’Mahony (GFS expert), who worked with the staff of the Ministry of Finance’s Medium-Term Expenditure Framework (MTEF) Development Center as the main counterparts. He also met with other relevant agencies, including the State Oil Fund of the Republic of Azerbaijan (SOFAZ), the State Employment Agency, and the State Social Protection Fund.1

The South African government’s COVID-19 response: protecting lives and livelihoods

This chapter brings together aspects of the impact of COVID-19 on lives and livelihoods in South Africa. As at 15 August 2021, the epidemic is reported to have led to 77 141 deaths and been associated with 229 850 excess deaths. At the same time, the national economy has been severely affected with Gross Domestic Product decline of 7% in 2020/21, job losses exceeding 2 million, and sharp reductions in national revenue. The chapter takes a case study approach to provide an overview of the Government’s budgetary support to the health and income protection responses as well as the modelling that informed these. It also reviews some of the carry-through implications of the economic down-turn on public finances, including health budgets. The authors draw primarily on their experiences and subsequent reflection, with particular focus on the period 1 March 2021 to 28 February 2022. The budget provision for the health response to COVID-19 exceeded R20 billion, which was achieved through additional allocations and reprioritisation. Income protection measures exceeded R100 billion. However, suboptimal attention was given to how prolonged lockdowns would affect businesses, jobs, livelihoods and the economy over the medium and long term, with job losses initially exceeding 2.2 million and 1.4 million by the first quarter of 2021. As these effects fed through to public finances, growth and tax revenue declined substantially, resulting in reductions in virtually all government budgets. Over the 2021 Medium-term Expenditure Framework period, the economic effects of the epidemic and stringent lockdown measures have resulted in the reduction of provincial health budget projections by as much as R76 billion. The chapter emphasises the need to consider both lives and livelihoods in pandemic decision-making, ideally bringing together various dimensions of epidemiological and economic modelling in a multi-criteria decision framework.

Brazil: Moving the budget focus from the short to the medium term

This article presents a brief overview of the fiscal rules framework in Brazil. It introduces the concept and stages of implementing a medium-term expenditure framework (MTEF) and suggests ways to refine Brazil’s incipient medium-term fiscal framework. It then proposes to bring the Brazilian budget process more in line with the best international fiscal planning practices, with the adoption of an MTEF, in order to incorporate the medium-term perspective into the allocation of public resources. By way of conclusion, it describes the benefits of having an MTEF directing public sector accounts.

THE CAUSES AND IMPLICATION OF DELAYED PASSAGE OF 2018 BUDGET ON THE NIGERIAS ECONOMIC RECOVERY AND GROWTH PLAN

The study utilized descriptive techniques in the assessment of the impact of sectoral allocations of Nigerias 2018 annual budget on selected macroeconomic variables of GDP growth rate, Exchange rate, Inflation, Oil prices, Oil production, Debt servicing among others and the 2016 Nigerias Economic Recovery and Growth Plan (ERGP). We identified some gray areas in the budget, budget padding, constitutional lacuna, non-compliance with fiscal responsibility Act, late preparation and consideration of medium-term expenditure framework, political face-off between the National Assembly and the executive, lack of patriotism as the causes of the long delay in the consideration and passage of the 2018 budget by the national Assembly. The study therefore recommends amendment of the 1999 constitution, sanctioning of erring Ministries, Departments and Agencies (MDAs) and deployment of ICT in budgeting tracking by civil society groups, communities and the general public.

Why Should the Budgetary Performance of Municipalities Be Optimized: Performance-Based Management

The performance issue always arises at the level of the local public administrations (or APUL) because of ineffective management. Most of the Malagasy decentralized local authorities (or CTD) are faced with insufficient resources and unnecessary or non-objective expenditure, due to the lack of control and reliable administration methodology. As a result, the public expenditure reform was the establishment of medium-term planned public expenditure or medium-term expenditure framework (CDMT) oriented to Result-Based Management (or GAR). For the CTD, it is the establishment of the program budget for a rationalization of the budget and its performance by abandoning the budget of resources. Performance therefore consists of using the results of a higher level of service, or of developing the quality of service by effectively managing local resources and the low contribution of the State, in times of crisis. This is why it is necessary to put into practice the principles of new public management, or New public management, which thus allows a rationalization of public expenditure, thanks in particular to the introduction of management control in administrations.

Medium Term Expenditure Framework (MTEF): A Panacea for Public Expenditure Management (PEM) In Nigeria?

This paper investigated the outcome of the adoption and implementation of Medium-term Expenditure Framework (MTEF) in the Nigeria budgeting process. MTEF is eulogized by the World Bank, and even donor organization DFR as the panacea to the poor public expenditure management (PEM) prevalent in most of sub – Sahara African Countries. MTEF was first adopted in Nigeria, following the passage of the Fiscal Responsibility Act 2007 Act 30 to guide her national annual budgeting process. Using simply statistical methods, we collated data from sixteen national budgets (2003 - 2016), and constructed statistical tables to investigate the MTEF in the Nigeria annual budgets. Using correlation coefficient, we examined the behaviour of three key fiscal and expenditure items in Nigeria annual budgets.Our findings showed strong positive correlation between the budgeted and actual figures in all three fiscal items. Oil production was negatively corrected with the actual. We concluded, following our findings that the adoption and implementation of MTEF has to a large degree improved fiscal discipline in the Nigeria budgeting process.

Analysis of not Using the Multi-Year Contract Method in Directorate General of Islamic Education

The application of multi-year budgeting is the implementation of the medium-term expenditure framework approach. Furthermore, the multi-year budgeting is carried out through the procurement of goods and services called the Multi-Year Contract. Multi-year budgeting provides certainty for the continued funding of activities/projects. Although, an activity/project that naturally lasts more than one fiscal year but not all planners use multi-year budgeting. This study reveals the background behind the policy of not using the multi-year budgeting method by spending unit in the Directorate General of Islamic Education, Ministry of Religion. The method used in this study uses quantitative research using the Analytical Hierarchy Process (AHP) model. The results of the study indicate that the existence of laws and regulations regarding multi-year budgeting is the most important element as the main reason as the choice of multi-year budgeting compared with internal factors. The most important element of legislation is related to the absence or unclear rules. Meanwhile, the most important element of internal factors is the certainty of funding activities/projects.

A Conceptual Model and Medium Term Strategy Templates for Improving Housing Budget Performance in Anambra State, Nigeria

This study advances a conceptual Housing Budget Performance Model (HBPM) and adapts medium term strategy templates to the housing sector of Anambra State for improving her annual housing budget performance and ultimately, housing delivery. This became expedient due to the prevalence of problems facing the budget process of the State. The Anambra State Government is still faced with poor budget performance arising from a myriad of challenges. Lacks of templates to monitor/track performance during housing budget implementation and review implemented budgets have also been attributed as causal factors for poor performance. The basis or platform for constructing the proposed HBPM was anecdotal evidences and in-depth review of salient budgeting models The researchers employed critical thinking in constructing the schematic model and explaining the operationalization of the variables, while the proposed medium term expenditure framework drew largely from the existing medium term framework presently used by the agriculture sector of Anambra State since it played a major role in its revitalization and sustenance. The conceptual HBPM developed is a holistic one; harmonizing the conventional budget process/stages/procedures and the peculiar nature of housing construction tendering, estimating and management, which also makes it unique. The implication of this model is that it will ensure that housing budget activities are focused on objective allocation, rational considerations, efficient preparation procedures, appropriate duration, execution, utilization of funds, monitoring and citizen participation. The medium term housing budget monitoring and review templates incorporates variables for checking housing targets, outputs, user impact, variance analysis of work done and remedial measures, which should be done every 3 or 4 years to give ample time for the housing program to make progress. The study recommends the HBPM and templates for further validation and possible adoption by the Anambra State Government, ministries, departments and agencies of housing, budget and economic planning.

PLANEJAMENTO FISCAL

This article presents a brief overview of the Brazilian fiscal rules framework and its evolution, pointing to the absences of an explicit long term fiscal policy objective and of medium term fiscal targets. It presents the concept and the stages of implementation of a Medium-Term Expenditure Framework (MTEF), an instrument adopted under different models by most developed countries, that allows the government to extend fiscal policy horizon beyond the annual budget schedule. Describes how Sweden, a world benchmark in public finance management, has a disciplined process for formulating the central government’s budget and uses a MTEF to carry out its medium-term fiscal planning, setting mandatory spending ceilings with three years in advance and indicative limits for 27 thematic areas. Next, suggests the improvement of our incipient Medium-Term Fiscal Framework (MTFF), with the extension of its time horizon and the presentation in the fiscal table of the primary revenues and expenditures main aggregates, as well as the definition of spending ceiling with three years in advance. In the following section, proposes how to align the Brazilian budget process with the best international fiscal planning practices, with and the adoption of a MTEF, in order to incorporate a medium-term perspective in the allocation of public resources. By way of conclusion, argues that the benefits of having a MTEF conducting the public accounts would be felt by both the government's technical area and Congressional parliamentarians.

Forecasting the Government of Lesotho's budget: an AR-MIDAS approach

This study uses an autoregressive mixed data sampling (AR-MIDAS) regression technique and monthly fiscal variable sub-components sampled from 1993Q1 to 2017Q4 to forecast quarterly aggregated key fiscal variables (i.e., total revenues and expenditures). Results of forecast evaluation criteria show that quarterly forecasts of total government revenue and total government expenditure are best performed by a PDL/Almon weight variant of the AR-MIDAS model with monthly values of indirect taxes and compensation of employees as predictor variables, respectively. The study recommends that the PDL/Almon weight variant of the AR-MIDAS model be used to complement techniques currently in place at the Central Bank of Lesotho and the Ministry of Finance for macro-fiscal forecasting. This will help support the Government of Lesotho's public financial management system as well as its medium term expenditure framework.

A COMPETENCY IN IMPLEMENTING THE MEDIUM TERM EXPENDITURE FRAMEWORK (KPJM) OF BUDGET FIELD ON FINANCIAL AND REGIONAL INCOME DEPARTMENT OF WEST SULAWESI

This study aims to determine the extent of the readiness of the competency of the Civil Servant (ASN) in the implementation of the Budget Sector Medium Term Expenditure Framework (KPJM) of budget field on financial and regional income department of west sulawesi. The method used in this study is a qualitative method with a descriptive approach, where this study uses interview guidelines as the main instrument of data collection. The informants in this study came from the staff of the budget department of BPKPD west sulawesi one person, secretary of BPKPD one person, the head of the budget department one person, the head of the sub-sector of the budget three people, the budget staff seven person. The results of the research are that the Medium Term Expenditure Framework system program is ready to be applied in the Budget Sector of the West Sulawesi Province Finance and Regional Revenue Management Agency as one of the needs in streamlining the management of the budgeting process, as well as the required competencies which have been a concern in terms of the ability to operate the Medium Term Expenditure Framework system is ready, only a little constrained by the absence of socialization or training and the absence of work guidelines for the application of (KPJM) as a reference for operating the (KPJM) system.

New Fiscal Package in Kosovo and Its Impact on Economy

In order to create a more flexible system for citizens and businesses in Kosovo, the Government of Kosovo made a decision by which from 1 April 2014 increased the salaries for 25% for employees receiving salaries and pensioner compensation and other social categories from the Kosovo budget. This Government decision carries some problems with regard to public finance management and impact on the country's economy by creating a new reality in the payroll and public spending. Direct impact of this document: Decision No: 01/176. 10 March 2014, are: First, the increase in wage expenditures was not planned in the Medium Term Expenditure Framework 2014-2016 and this has given an indication of macroeconomic inefficiency (Assessed by the Kosovo Finance Ministry). Secondly, this increase decreases capital investment costs, which have the greatest potential to generate economic growth. Thirdly, wage growth along with spending on the Pristina-Skopje highway is expected to increase the budget deficit over the fiscal rule. Such a situation was also present at the time of investments in the Motorway Vermicë - "Nations connection way". In order to balance the increase of budget expenditures with revenues, the International Monetary Fund (IMF), at the conclusion of the Kosovo visit in March 2015, suggested to the Government of Kosovo that in the continuation of the increase of the various excise duties to see the possibilities for growth Value Added Tax (VAT) which would bring a substantial increase in budget revenues. At the 20th meeting of the Government of Kosovo, dated 24 March 2015, during this IMF visit, the Government took a series of decisions on fiscal changes. Among other things, these decisions have to do with the approval of new draft laws: 1. Changes in Value Added Tax (VAT); 2. Changes in Corporate Income Tax; 3. Changes in Personal Income Tax; and 4. Changes in excises duties of cars, tobacco, and alcoholic beverages etc. Based on the analysis of these changes and their effects, one can make an assessment of the economic and fiscal effects of the aforementioned laws. Some of the key findings of this study-analysis section show that small businesses will be negatively impacted by lowering the VAT threshold, while the abolition of VAT on machinery and raw materials will lower the cost of production and potentially increase investments in manufacturing sectors. Reform in fiscal policy encourages greater investment in production and at the same time improves business liquidity. According to an estimate by the Ministry of Finance, businesses will have about 27.6% cheaper start of production process. Keywords: Kosovo budget.,VAT, Tax, IMF, Ministry of Finance, fiscal