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MTEFs :objectives and preconditions

MTEFs :objectives and preconditions. Allister Moon PREM week, November 2000. MTEF objectives. Aggregate fiscal discipline: an instrument to support sustained stabilisation Strategic allocation: strengthening policy competition and predictability in budget strategy

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MTEFs :objectives and preconditions

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  1. MTEFs :objectives and preconditions Allister Moon PREM week, November 2000

  2. MTEF objectives • Aggregate fiscal discipline: an instrument to support sustained stabilisation • Strategic allocation: strengthening policy competition and predictability in budget strategy • Technical efficiency: an instrument for enhancing public sector accountability

  3. Development of an MTEF : Uganda 1992-00 • 1992 -94 Macroeconomic framework , + selective treatment of medium term allocation (eg wage bill, defence, roads) • 1995 - 97 Macro framework plus comprehensive sector allocations, linked to sector policy objectives(eg UPE, PEAP) • 1998- annual consultations on MTEF with donors, legislature, civil society

  4. Aggregate fiscal discipline • Comprehensive and realistic macroframework • Multi year perspective on aggregate resources, expenditure envelopes • Ensuring consistency between resources and aggregate policy commitments

  5. Strategic allocation (1) • Decisionmaking process: • transparent, contestable, • Cabinet level • early in the budget cycle • binding for resource ceilings in annual budget preparation • Increase in predictability of sector financing

  6. Strategic allocation (2) • Sector expenditure plans, linking policy to budgets • Multi year • Integrated (eg local/external financing, capital/recurrent, wage/non wage) • Linking inputs/outputs/outcomes

  7. Accountability • Shifting focus to outputs, rationalisation of controls on inputs • Publication of the framework • Public announcement of outputs, monitorable performance targets, • Focal point for dialogue on budget strategy with legislature and civil society

  8. Preconditions for beginning MTEF • Macroeconomic stability • Predictability of aggregate expenditure envelope • Commitment from Cabinet • Core capacity in finance ministry/central agencies

  9. Preconditions for progress with MTEF • Capacity to enforce hard budget constraint at sector/ministry level (systems capacity and political will) • Executive commitment to a more transparent budget process • Capacity in sector policy analysis and expenditure planning • Supportive donor behaviour

  10. Preconditions for considering an MTEF

  11. Supporting an MTEF: supply • Strategies for PE work which focus on long term strengthening of PEM capacity • Delivering advisory support within the time constraints of the budget cycle • Refocussing sector work to strengthen base for sector expenditure plans

  12. Supporting an MTEF: demand • Use the MTEF as a reference for policy dialogue and program design • Encourage Government’s use of the MTEF in donor coordination • Promoting access and role of civil society in MTEF process

  13. Lessons from experience • Commitment from central agencies critical • Balance ‘top down’ and ‘bottom up’ • Develop ‘bottom up’ sectoral coverage in step with increasing predictability • Look for early engagement of players outside the executive • Keep expectations realistic and plan for long haul

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