INTRODUCTION TO PUBLIC FINANCE MANAGEMENT Module 2.3 :MTEF and other special issues 1.

Slides:



Advertisements
Similar presentations
Improving Budgetary Outcomes
Advertisements

Challenging the Budget Creating Incentives for Results Rwandas Experience Elias Baingana - Budget Director.
Linkages Between NPoA and MTEF
International Monetary Fund Fiscal Affairs Department Holger van Eden
MEDIUM-TERM BUDGETING LESSONS FROM OTHER REGIONS The World Bank Pacific Department 1.
THE PERSPECTIVE FROM THE SECTORS What would Sectors/Line Ministries (LMs) want from an MTEF? What would Sectors/Line Ministries (LMs) want from an MTEF?
MTEF and performance budgeting
The Medium Term Expenditure Framework
1.1 PFM objectives and budgetary approaches
1 Experiences of Using Performance Information in the Budget Process OECD 26 th March 2007 Teresa Curristine, Budgeting and Public Expenditures Division,
Liberia – Duke University Program PFM reform strategy Duncan Last Public Financial Management Division March 4, 2011.
INTRODUCTION TO PUBLIC FINANCE MANAGEMENT Module 1.3 The Budget & budget preparation process.
Public Finance Reform in Slovakia Roland Clarke World Bank Ministry of Finance Slovak Republic September 6, 2005.
SECTOR POLICY SUPPORT PROGRAMMES A new methodology for delivery of EC development assistance. 1.
The MTEF in Practice - Reconciling Conflicting Claims Malcolm Holmes.
Focusing and integration PEM reforms to ensure they ‘matter’ Bank work in Armenia, 2005 Matthew Andrews ECSPE.
RESULTS BASEDMANAGEMENT IN GAMBIA DAWDA D FADERA.
The Issues of Budgetary Reform Unit 3. PFM Reform – Change Management Module 3.2. Preparing and managing a reform programme.
SECTOR POLICY SUPPORT PROGRAMMES A new methodology for delivery of EC development assistance. 1.
© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Budgeting EU Funds in Estonia Siim Sikkut Ministry of Finance,
© OECD UKRAINE GOVERNANCE ASSESSMENT © OECD Sigma Ukraine governance assessment Public Expenditure Management
MKUKUTA/PER Consultations 2007 DPG session MKUKUTA/PEFAR 22 May.
The Role of Parliament in the budget process. Overview Actors in the budget process Stages in the budget process Budgeting for the medium term.
Moving PFM reforms forward: A Strengthened Approach PEM reforms in PRSP countries from Europe and Central Asia Warsaw, February 6-9, 2005 David Biggs DFID.
The Budget Process A simplified and generalized summary of budgeting in the public sector. Political Dynamics Actors in the budget process Stages in the.
A Preliminary Review of the MTEF Experience in Africa Philippe Le Houerou Rob Taliercio AFTM1.
INDONESIA BUDGET REFORM (Priorities and Challenges) International Conference Budgeting for Performance-Modernizing PFM in Indonesia May , Hotel.
1 BUDGET PREPARATION AND PROCESSES: Budget Division Ministry of Finance.
INTRODUCTION TO PUBLIC FINANCE MANAGEMENT (PFM) Module 1.1 Definitions, objectives of PFM and its context.
1 Public Expenditure Management and the Medium-Term Fiscal Framework Workshop on Bhutan Public Expenditure Management August 16-20, 2004 Christian Eigen-Zucchi.
1 Joint Donor Staff Training Activity Tanzania, June 2002 Partnership for Poverty Reduction Module 4 - Links between PRSP, Sector Programmes and.
___________________________ VIETNAM EDUCATION SWAP Presented by Mr. Truong Thanh Hai Ministry of Education and Training Ministry of Education and Training.
Government Resource Estimation and Allocation Tool - GREAT Presentation – June 2015.
Module 1.2 Introduction to the Budget Cycle
Managing Public Budget to Facilitate Economic Growth and Reduce Poverty Public Expenditure Analysis & Management Staff Training Course May , 2001.
GRB in Austria TOT on gender Responsive Budgeting, Sponsored by UN Women Russian Presidential Academy on the Economy and Public Administration Moscow,
Page 1 Budget Execution and Financial Accountability Course January 10-12, 2005 Country PFM Performance Measurement and Monitoring Nicola Smithers PEFA.
1 PRESENTATION TO THE PORTFOLIO COMMITTEE OF MINERAL RESOURCES. STATEGIC PLAN 2014/19 DATE: 8 JULY 2014 Programme Financial Administration.
Cluster Bankable Programmes, Budget Process and ARTF M Mustafa Mastoor Deputy Minister for Finance.
MTEF and links to annual budgets Osten Chulu Economist – UNDP Lesotho.
Module 2.1: The Budget; Budget preparation and the MTEF INTRODUCTION TO PUBLIC FINANCE MANAGEMENT.
Estimates of National Expenditure 2003 NATIONAL TREASURY.
Collaborative Africa Budget Reform Seminar Budget Reform in Mauritius
REPUBLIC OF BULGARIA MINISTRY OF FINANCE CURRENT CHALLENGES IN BUDGET REFORM SOFIAMR. LYUBOMIR DATZOV 03 DECEMBER 2004DEPUTY MINISTER
ADE’s 25 th anniversary Economic Governance: Key to Development ? Introduction Bruxelles – Bibliothèque Solvay – 5 October 2015.
PFM reform – change management Module 3.2 Preparing and managing a PFM reform programme 1.
1 Highlights of Gaps in the Preparation of MTBF/MTFF/MTEF Governments in Africa introduced: The Medium Term Budget/Fiscal/Expenditure Frameworks (MTBF,
1 Public Finance Management Reform The Georgian Experience 2008 ICGFM Winter Conference December, 2008.
1 Budget Execution Course – Opening Session 3 November, 2003 Overview Comments by David Shand OPCFM.
Improving public financial management. Supporting sustainable development. PEFA and fiscal transparency OECD CESEE SBO Ljubljana, Slovenia July 8, 2016.
An Overview of Medium Term Expenditure Framework © July 2016 BUDGET OFFICE OF THE FEDERATION - TRAINING WORKSHOP MODULE 03: OVERVIEW OF MEDIUM TERM EXPENDITURE.
Public Expenditure Management Conference Presentation by Ministry of Finance of Georgia Warsaw February 7-9, 2005.
Public Expenditure Management: The Essentials for a PER
Introduction/Background Aim of the assessment was to assess the impact of the 3 institutions MOHCDGEC, PO-RALG and MOFP in the flow of funds from national.
GOOD PRACTICES AND REFORM OF PUBLIC ADMINISTRATION
Program budgeting in the Kyrgyz Republic
Ensuring resources for the EFA plan
Medium-Term Expenditure Framework: Lessons
PEFA 2016 Slides selected from the training materials of the PEFA secretariat.
Public Expenditure Management Conference Presentation by Ministry of Finance of Georgia Warsaw February 7-9, 2005.
The role of the Passport Indicators in Monitoring PFM Strategy
Draft OECD Best Practices for Performance Budgeting
INTRODUCTION TO PUBLIC FINANCE MANAGEMENT
PEFA 2016 Slides selected from the training materials of the PEFA secretariat.
MTEFs :objectives and preconditions
Finding A Common Scale: An Overview of PFM Performance Indicators
Implementing Budget Reforms
Linking planning, policy and budgets : experience with MTEFs
2018 National PEFA Assessment Budget Community of Practice of PEMPAL
Financial Control Measures
Presentation transcript:

INTRODUCTION TO PUBLIC FINANCE MANAGEMENT Module 2.3 :MTEF and other special issues 1

2.2 & 2.3 Planning and budgeting 3.1 The Budget Execution Cycle 5.2 Decentralisation 1.1 Introduction 2.1 Macroeconomics of the Budget 4.1 Revenue Administration 3.2 Payroll, Procurement & IT 1.3 Budget Classification 4.3 Accounting & Reporting 4.2 Treasury Management 1.2 The Budget 5.3 Assessing & Recapitulation 3.3 Internal Control & Audit 5.1 External Scrutiny & Oversight Module map 2

Course outline What is an MTEF? Main features of an MTEF The MTEF preparation procedure Achievements and pitfalls Other special issues 3

Course outline What is an MTEF? Main features of an MTEF The MTEF preparation procedure Achievements and pitfalls Other special issues 4

What is MTEF? 5

“ It is said that the Inuit people have 15 different words for snow. The opposite is true of MTEF, where the same term is used to refer to very different ways of stretching the time perspective of annual budgeting. Conflating a variety of different approaches into a single rubric has caused a host of problems” Schiavo-Campo, “Potemkin Villages: 'The' MTEF in Developing Countries” Public Budgeting and Finance, Summer What is MTEF?

Variant 1/ The MTEF is an instrument for fiscal discipline, for prioritisation in conformity with the strategies and for providing funding predictability OECD countries Some developing countries Variant 2/ The MTEF(s) cost sector strategies. It is used for negotiating budget increases with the Ministry of Finance and additional financial support with the donors Other developing countries 7

8 1.MTEF for fiscal discipline and prioritisation 2.Strategy costing MinisterialSectoral Consistent with the MTFFShould be realistic, but may include financial gap and scenarios Rolling horizonRegularly updated, but may have a fixed horizon Projection period: 3 to 4 yearsA long term period is required in several sectors Unified budget-MTEF preparation processes Prepared outside the pressure of the budget preparation process Expenditure projections are the result of the budget process Simulation models are frequently used to prepare the projections

9 Instrument + Process Government strategic framework sector strategies & policies framework, laws Annual budget law appropriations & forward estimates MTEF

What is MTEF? The MTEF defines a strategy implementation path that takes into account the financial constraints We can distinguish: The MTFF, which defines the totals The Medium Term Budget Framework (MTBF) –or “global” MTEF- which allocates MTFF overall expenditure envelopes to ministries or sectors/functions The MTEF; detailing MTBF projections by programme 10

What is MTEF? 11

What is MTEF? The MTEF projects expenditures according to their purpose. It is aimed at: Planning policy changes that need several years to be implemented, finding a fiscal space for priority programmes IF, the processes are disciplined, improving operational efficiency through providing managers with predictability of funding 12

Fiscal discipline Inter-sectoral resource allocation Intra-ministerial resource allocation 13 Medium-Term Frameworks

Course outline What is an MTEF? Main features of an MTEF Achievements and pitfalls Other special issues 14

MTEF in Tajikistan 15

Exercise Exercise: Identify key MTEF concepts Explain content of key concepts 16

What is top-down / bottom-up in an MTEF? Top-down budget preparation Multi-year projections of resource envelope targets (what is affordable) Bottom-up budget preparation Multi-year cost estimates of sector programmes (what has to be financed, with a focus on programme performance) Integrating these two pillars Institutional (political-administrative) decision- making process to make the necessary trade-offs 17

What is baseline costing? Year 0 Year 1 Year 2 Year 3 Baseline Expenditure ceiling Savings on existing programs MTEF expenditure projections New programs and policy changes 18

What is a rolling budget?? 19 Forward EstimatesBudget T T +1 T +2 BudgetForward Estimates Budget t +1 t +2t +3 t +4 t+5 19

MTEF process 20

MTEF Features of an MTEF  Projection period: 3 to 4 years  Encompass all expenditures whatever their economic nature and financing source  Generally, the MTEF is rolling.  The MTEF is consistent with the MTFF  The first year of the MTEF is consistent with the budget  The out-years are indicative, but they show a political commitment 21

Main features of an MTEF The Ministerial MTEF  For accountability and to ensure a close link with budget management  Sector/cross-ministry MTEFs if any, should be divided in ministerial MTEFs  providing managers with some predictability  providing a framework for performance monitoring 22

Main features of an MTEF  The Ministerial MTEF  Generally structured in programmes, they may include performance indicators  Degree of detail variable from the same degree of detail as the budget to a presentation by broad programmes 23

Course outline What is an MTEF? The MTEF preparation procedure Achievements and pitfalls Other special issues 24

Achievements and pitfalls The results are uneven….. “Developing comprehensive MTEF can be effective when circumstances and capacities permit…. Otherwise, … it might distract attention from the immediate needs for improving the annual budget and budget execution processes… in a number of African countries, the MTEF was introduced prematurely, and is turning out to be merely a paper exercise”. World Bank-IMF Global Economic Report 2006, page

Why uneven results?  Too complex/sophisticated approaches.  Poor annual budget discipline.  No impact on the annual budget, the MTEF prepared the previous year is ignored.  Administrative and/or political instability. Every year MTEF preparation starts from scratch. 26 Achievements and pitfalls

Achievements and Pittfalls Why uneven results?  Isolated sector MTEF prepared by external consultants to comply with a donor request.  The MTEF remain a pure technical exercise; no political interference  Economic instability  Lack of predictability of resources 27

Supporting donor practice?? However,it does not make sense to demand a "sector MTEF" prematurely…. Taking stock from experience, it is recommended to adopt a process and systemic perspective on the development of a sector MTEF, rather than making it a pre-requisite for supporting a sector programme. EC. Support to sector programmes. Guidelines no2. July Page Achievements and pitfalls

How to avoid the pittfalls? Before considering implementing an MTEF Make sure annual budget processes are disciplined Make sure decision makers are involved Ensure there are capacities to prepare an MTFF 29 Achievements and pitfalls

How to avoid the pittfalls? Prepare costed sector strategies first Estimate the forward costs of existing activities (the baseline) Prepare an MTBF Avoid complexity Once these tasks completed, consider implementing an MTEF, eventually starting with few pilot ministries avoid complexity 30 Achievements and pitfalls

Course outline What is an MTEF? The MTEF preparation procedure Achievements and pitfalls Other special issues 31

32 Performance information Performance indicators: Input Output indicator Outcome indicators

Some points to keep in mind The link between performance information and resource allocation is generally indirect PI should be attributable to the programme or the organisation the performance is measured PI published for the legislature and the citizens should be:  aimed at measuring the efficiency and the effectiveness of the relevant activities  in a limited number Performance information 33

Function of the performance information Link between performance information and funding Planned or actual performance Main purpose in budget process PresentationalNo linkPerformance targets and/or performance results Accountability Performance informed budgeting Loose/indirect link Performance targets and/or performance results Planning and/or accountability Direct/formula performance budgeting Tight/direct link Performance results Resource allocation and accountability Performance information Performance budgeting in OECD countries. OECD

35 Performance information

Prepared in many countries, notably in the social sectors May have two functions: Support budget preparation within MDAs Support budget implementation and its monitoring The annual activities plan 36

But these activities plans should be kept simple In some poor countries there are plans of about 8000 thousands activities. Such plans cannot be monitored. The annual activities plan 37

 Sound MTEF processes may help in reinforcing the policy-budget link, but only if several preconditions are met  Strategy costing should be carried out, but planning documents with a financial gap should not be considered as financial commitment of the government  Programming documents and working plans should not be over-sophisticated Key messages 38