Medium-term Expenditure Framework Research Articles

Medium Term Expenditure and Fiscal Management in Nigeria: A Review of the (2005-2008) Framework

The Medium Term Expenditure Framework (MTEF) provides the link between policy priorities and the budget. Given that in developing countries in general, and in Nigeria in particular, there is a disconnection between planning, policy and the budget, the MTEF has increasingly been regarded as central to public expenditure reforms. The objectives of this paper are to review the MTEF and budget performance in Nigeria for the period 2005-2008, and identify the challenges undermining the effective operation of the budgetary processes. The paper gathered that the MTEF is the bridge between the national development plan, its underlying policies and the annual budget. Analysis of available data on budget performance during the review period shows that public finance in Nigeria have not been operated within the specifications of the MTEF and the budget, and the priorities expressed in the budget are not always in sync with national objective plans. Some of the identified challenges to effective public expenditure management in Nigeria include lack of citizen’s participation in the process, the bureaucratic and inefficient nature of the civil service, large scale corruption, lack of proper coordination between the national development plan and budget, lack of adequate reforms in other key budget areas, such as execution, monitoring and reporting, lack of political commitment, and lack of adequate coordination between the national and sub-national governments.

The Consolidated Medium-Term Income and Expenditure Framework

The medium-term projections of Fund income and precautionary balances accumulation have been updated since the April 2012 projections. The overall income outlook remains positive with continued high lending income expected in the medium-term. The projections indicate a downward shift in the income path primarily due to lower non-lending income as a result of the low global interest rates and the agreement to phase in investments under the new gold-sales funded endowment. The updated expenditure path has not changed significantly. The projections also illustrate a broad balance between income and expenditures when lending returns to pre-crisis levels. The accumulation of precautionary balances remains strong in the medium-term. The indicative medium-term target of SDR 20 billion is now expected to be reached by FY18–FY19.

The Consolidated Medium-Term Income and Expenditure Framework

This paper updates the consolidated income and expenditure outlook and the projected accumulation of precautionary balances over the medium-term. The paper incorporates and extends the income and budget projections in the companion papers; these projections are also in line with those discussed in the recent paper on the review of precautionary balances.

Philippine Public Environmental Expenditure Review at National and Local Levels

This study is a component of the Philippine Poverty Environment Initiative (PPEI), a project that links environmental management to poverty alleviation. The PPEI supports the target of both the United Nations Development Program (UNDP) and the United Nations Environment Program to integrate pro-poor climate and environmental concerns into development planning and economic-decision making. In pursuing such target, this study sought to analyze the allocation and management of public expenditures in the Philippines to provide key guidance to strategic planning and budget preparation and to identify ways in which to improve the efficiency and effectiveness of resource allocations. The study seeks to review the public environmental expenditures at national and local levels and analyze how they contribute to environmental and poverty outcomes. It also aims to explore the manner by which the level of environmental expenditure data could be incorporated in the Medium Term Expenditure Framework (MTDF).

Review of the Fund's Income Position for FY 2011 and FY 2012

This paper reviews the Fund’s income position for FY 2011 and FY 2012. The paper updates projections provided at the FY 2011 midyear review and sets out related proposed decisions for the current and next financial years. A companion paper provides an update on the consolidated medium-term income and expenditure framework.

The Consolidated Medium-Term Income and Expenditure Framework

This paper updates the Fund’s consolidated income and expenditure outlook from the projections in January 2011. The paper incorporates and extends the income and budget projections in the companion papers, Review of the Fund’s Income Position for FY 2011 and FY 2012 (4/7/11) and FY 2012–FY 2014 Medium-Term Budget (3/31/11). The paper also provides an update on the projected accumulation of precautionary balances over the medium term. This responds to a request made during the September 2010 discussion of the adequacy of precautionary balances that progress towards targets be assessed also in the context of the annual income discussion.

Supporting Africa’s Post-Crisis Growth: The Role of Macroeconomic Policies

The objective of this paper is to discuss macroeconomic policies that would help African countries, especially the low income countries, reach strong, sustained and shared growth in the post-crisis world. The paper first reviews, with a special focus on LICs, macroeconomic policies in Africa prior to the crisis. It then discusses factors behind ‘the Africa surprise’ that is the continent’s overall good performance during the crisis and relatively fast recovery. It underscores that in the aftermath of the crisis, the emphasis of the macroeconomic policy needs to shift from the objective of very low inflation that predominated prior to the crisis towards growth. Fiscal policy is key in this regard, through public outlays on infrastructure anchored in the medium term expenditure frameworks that would also have a counter-cyclical role. Where conditions allow, frontier market LICs may want to consider adopting flexible inflation targeting frameworks that would provide sufficient room for expansion of credit to the private sector.

Cameroon: 2011 - Article IV Consultation: Staff Report; Debt Sustainability Analysis; Informational Annex; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Cameroon

In this study, Cameroon’s economic recovery, low inflation, and positive economic prospects have been ascribed. Efforts to improve non-oil revenue by broadening the tax base, streamlining exemptions, and increasing the efficiency of tax and customs administration are outlined. The need to rebuild fiscal buffers, strengthen the budget execution process, and accelerate efforts to operationalize the medium-term expenditure framework are emphasized. The importance of redoubling efforts to address the severe infrastructure gap and improve the business climate and competitiveness are also provided.

Development of a Mental Health Policy and System in Tanzania: An Integrated Approach to Achieve Equity

Development of a Mental Health Policy and System in Tanzania: An Integrated Approach to Achieve Equity

Budgeting in the Philippines

This profile offers a general overview of the Philippine system of budgeting at national level. Special characteristics of the Philippine budget process are examined, such as a commitment to fiscal discipline and the national planning function. The three steps of the annual budget formulation cycle are described: the development of economic assumptions and revenue forecasts; the use of a medium-term expenditure framework to assess the continuing costs of existing programmes; and identifying the resultant “fiscal space” through the Paper on Budget Strategy. The process for allocating resources is then described, including the “Budget Call”, the submission and review of proposals, the role of the central ministry and the line ministries, and finally the role of Congress, constitutional restrictions, and the nature of executive-legislative relations.

Austria's budget reform

In December 2007 and December 2009, Austria’s Federal Parliament decided on a far-reaching, comprehensive budget reform package. The introduction of a legally binding medium-term expenditure framework, of accrual budgeting and accounting as well as performance budgeting marks a decisive change, not only in steering the budget, but even more so in the Austrian administrative and political culture. Both legislative decisions were finally taken unanimously. This article describes the respective change management and gives an overview of the main Austrian reform elements.

アジアにおける政府の信頼と行政改革

Asian countries enjoy high trust in government except Japan and South Korea. In spite of less developed democracy and corrupt bureaucracies, Asian people satisfy with their democratic system and governmental services. It indicates the coexistence of old “authoritarian-bureaucratic” regimes and popular political leaders based on the newly developed political parties. Despite this situation, Asian leaders are eager to promote administrative reforms copying New Public Management from Anglo-Saxon countries. In recent years, Asian governments attempt an introduction of advanced reform measures such as Results-based Performance Management and Medium Term Expenditure Framework, while reforming public service in Japan has stagnated. We might say that it is a kind of gimmicks to tame a rising middle class to fend off the increasing pressure on democratic governance in Asian countries.

Potemkin Villages: “The” Medium‐Term Expenditure Framework in Developing Countries

By neglecting institutional and capacity considerations, medium‐term expenditure framework (MTEF) introduction has produced in most developing countries elaborate facades of fiscal reform at high transaction costs without improving budgetary outcomes. There have been positive impacts: awareness of the need to look beyond the immediate urgencies; some encouragement of intragovernmental coordination; and initial orientation toward results. Negative impacts have been much heavier: little local ownership; distraction from basic budgeting problems; and severe strain on limited capacity. Unbundling “the” MTEF permits identifying the variant suitable to the specific country and the steps to gradually develop it: unlike a “programmatic MTEF,” a simple “forecasting MTEF” is both feasible and useful.

Budgeting in Portugal

The Portuguese government has recently undertaken comprehensive structural reforms of the public sector and has successfully reduced its budget deficit. This article explores particular features of the Portuguese budget system and the proposed further reforms, including the adoption of a medium-term expenditure framework and performance budgeting.

World Bank Support for Public Financial Management: Conceptual Roots and Evidence of Impact

The advice provided by the Bank on improving public financial management (PFM) is influenced by debates on theory and practice in developed and developing countries. This paper touches on some of the highlights of these debates, drawing from indicative literature mainly since 1990 from scholars and practitioners. The second part of the paper discusses examples of Bank support for reform of budget planning and execution, in particular financial management information systems (FMIS), medium-term expenditure frameworks (MTEF), procurement, auditing, monitoring and evaluation, and the strengthening of key budgetary accountability institutions, like public accounts committees of the legislature and supreme audit institutions.

Budgeting in Latin America

This article provides a snapshot of the status of budgetary institutions, procedures and practices in Latin American countries based on the results of the OECD 2006 budget survey. Particular elements include: the legal framework and role of the legislature; fiscal rules; medium-term expenditure frameworks; performance information; and budget transparency.

Mainstreaming Statistics in the Poverty Reduction Strategy Approach to Provide for More Effective Technical Assistance: Some Experience At the IMF

The paper reviews the Poverty Reduction Strategy (PRS) approach and efforts to build institutional statistical capacity to permit evidence-based monitoring of the Poverty Reduction Strategy Papers (PRSPs). Integrating the PRS approach and statistical development strategies could provide significant synergies in improving the monitoring of the PRSP goals. Mainstreaming the statistical strategies in such development plans should enhance the national priority for statistical reforms and provide a basis for costing such reforms for their incorporation into the medium-term expenditure framework. The paper concludes that such an outcome is likely to facilitate funding for the implementation of these reforms and boost the effectiveness of statistical technical assistance.

Malawi: Lessons Learnt from First Reforms Lead to New Approach

Malawi provides valuable experience on the advantages of a holistic approach when attempting reforms, and on how to manage longer reform programmes. Since 1995, the budget process has been based on the principles of the Medium-term Expenditure Framework. This article presents the findings of a comprehensive review of the MTEF in 1999/2000 which examined its strengths and weaknesses, the possible causes and the proposed reforms required. MTEF Phase II is targeted at strengthening the management and co-ordination of the budget process, ensuring that there is political leadership of the budget process, improving policy and budget scrutiny processes, and strengthening financial accountability systems. The article also draws on a review of the education sector for a line ministry perspective on whether and how budgetary reforms assist in improving service delivery.

Something Funny Happened on the Way to Reform Success: The Case of Budget Reform Implementation in Ghana

The current article discusses experience with budgeting and financial management reforms in Ghana and is particularly focused on the development of the Medium Term Expenditure Framework (MTEF) between 1998 and 2002. Evidence shows that this reform began well but faltered after an initial period of progress. A number of factors are referenced in trying to explain why reform implementation was derailed, including reform ownership and political will, organizational integration and organizational incentives, and strategic capacity. All of these factors are commonly presented as influences on reform implementation. The Ghanaian experience provides detail as to how such influences could work. The opinions expressed in this paper are those of the authors and do not necessarily reflect the positions or perspectives of the Overseas Development Institute or the World Bank.

Future fiscal arrangements of the European Union

Since 1988, the EU budget has been set within a stable legal framework that has a number of distinctive characteristics. In the preceding twenty years, the budget had been one of the most hotly contested political battlegrounds.1 There were protracted disputes, on the one hand, between the Member States, with the UK especially anxious to lower its net contribution; and, on the other hand, between the European Parliament and the Council over decision-making, as the directly elected Parliament sought to flex its muscles. Regular crises in raising sufficient money were also a persistent problem. An agreement reached at the 1984 Fontainebleau European Council resolved the UK question by introducing the now infamous abatement. Subsequently, however, other Member States have also become substantial net contributors and have become increasingly insistent on finding ways of reducing their commitments. Various ad hoc compromises have been used to curb these perceived excesses, with the results that the legal position has become ever more messy, while also rendering the principles behind the budget increasingly opaque.2 The conflict between the institutions about the budget reached a peak in the mid-1980s, despite an attempt in 19823 to resolve the differences. Then, at the Brussels European Council in 1988, a new system of financing and structure of spending was agreed, along with a medium term expenditure framework – the Financial Perspective (FP) – and a cap on total outlays: the