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Medium Term Expenditure Framework: What is it?

Medium Term Expenditure Framework: What is it?. PREM Week Thematic Session Washington, DC November 21, 2000 Vinaya Swaroop. What is a MTEF?. A tool for linking policy, planning & budgeting over a medium-term ( 3 years) at the Government-wide level;

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Medium Term Expenditure Framework: What is it?

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  1. Medium Term Expenditure Framework: What is it? PREM Week Thematic Session Washington, DC November 21, 2000 Vinaya Swaroop

  2. 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;

  3. 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.

  4. 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;

  5. What can it do? • Improve predictability of funding for line ministries.

  6. 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).

  7. 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?

  8. 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?

  9. A Checklist on MTEF... • Last but not least: A MTEF will not solve all the service delivery problems.

  10. “...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

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