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; It consists of a top-down resource envelope & a bottom-up estimation of the current & medium-term costs of existing policies;

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.

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;

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

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).

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?

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?

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

“...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