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? What do we expect LMs to do to effectively prepare and implement MTEF? What do we expect LMs to do to effectively prepare and implement MTEF? What are the practical problems which usually arise? What are the practical problems which usually arise?

2. WHAT DO SECTORS/ LMs WANT FROM AN MTEF? Assessment of Current Situation: Pre-MTEF experience of key ministries in Nepal (Education, Health) - -functions, effectiveness, problems. Are their similarities in Bhutan?: What is the role/functions of Sectors/LMs? What is the role/functions of Sectors/LMs? How well are they doing? Are they delivering? How well are they doing? Are they delivering? Why not? What are their constraints? Why not? What are their constraints?

3. What Do The Sectors/LMs Expect From An MTEF? Better funding; Better funding; Freedom/Authority to formulate sector programs/set priorities; Freedom/Authority to formulate sector programs/set priorities; Flexibility in fund management/Virement; Flexibility in fund management/Virement; Accountability for program delivery. Accountability for program delivery. (Ideally, MTEF would eventually move to program budgeting/block allocations which Sectors/LMs will prioritize, allocate, manage, deliver contracted outputs/outcomes and be accountable for. It will take time to get there). (Ideally, MTEF would eventually move to program budgeting/block allocations which Sectors/LMs will prioritize, allocate, manage, deliver contracted outputs/outcomes and be accountable for. It will take time to get there). Why is this not happening now? Nepal Experience; MOF view

4. WHAT IS EXPECTED FROM LMs FOR IMPLEMENTING AN MTEF? Preparing Sector Programs: Living within Funding Constraints/Sector Ceilings; Living within Funding Constraints/Sector Ceilings; Set sector goals, strategy and policies to achieve Agreed national (PRSP) Goals; Set sector goals, strategy and policies to achieve Agreed national (PRSP) Goals; Review all sector programs, projects and activities; Change orientation from focusing on inputs to delivery of agreed outputs/services; Review all sector programs, projects and activities; Change orientation from focusing on inputs to delivery of agreed outputs/services; Align sector programs/activities accordingly, and prioritize all activities, (Criteria to be provided by MOF/Planning); Align sector programs/activities accordingly, and prioritize all activities, (Criteria to be provided by MOF/Planning); Prepare estimates of expenditure needs for three years and update them annually, (“Rolling” MTEF); Undertake “costing” as practicable; Prepare estimates of expenditure needs for three years and update them annually, (“Rolling” MTEF); Undertake “costing” as practicable;

5. What is Expected from LMs? – Continued. Monitoring Implementation and Ensuring Accountability: Monitoring Implementation and Ensuring Accountability: Develop modalities for monitoring progress of activities and for regular reporting to MOF/Planning ;(Prepare work programs, internal monitoring and reporting procedures); Develop modalities for monitoring progress of activities and for regular reporting to MOF/Planning ;(Prepare work programs, internal monitoring and reporting procedures); Hold themselves accountable for effective management of resources provided to them and for delivery of results; Hold themselves accountable for effective management of resources provided to them and for delivery of results; Internal capacity building of key units. Internal capacity building of key units. All of this will involve a new way of working and “mindset change” in both LMs and MOF in order to make MTEF approach to work.

6. POSSIBLE PRACTICAL PROBLEMS Cursory review of sector programs/inadequate prioritization. (Need clear guidelines from MOF/Planning regarding supremacy of PRSP and prioritization criteria); Cursory review of sector programs/inadequate prioritization. (Need clear guidelines from MOF/Planning regarding supremacy of PRSP and prioritization criteria); Mindset Change: Do LMs really believe that the Government will move to the new way of budgeting and expenditure management? (If not, they will only go through the motions. Need strong collaboration among key Govt. agencies -MOF, Planning etc.- and clear signals to LMs); Mindset Change: Do LMs really believe that the Government will move to the new way of budgeting and expenditure management? (If not, they will only go through the motions. Need strong collaboration among key Govt. agencies -MOF, Planning etc.- and clear signals to LMs); Cleaning up sector programs (by dropping or phasing out projects/activities) may be difficult due to political pressure or objections from external donors; Cleaning up sector programs (by dropping or phasing out projects/activities) may be difficult due to political pressure or objections from external donors; Mechanisms to enforce new accountability, monitoring and reporting guidelines may be weak. (Improving the expenditure reporting and monitoring system and institutional capacity at various levels are critical to addressing these problems). Mechanisms to enforce new accountability, monitoring and reporting guidelines may be weak. (Improving the expenditure reporting and monitoring system and institutional capacity at various levels are critical to addressing these problems).