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Linking planning, policy and budgets : experience with MTEFs

Linking planning, policy and budgets : experience with MTEFs. Public Expenditure Analysis & Management Seminar, May 22-24, 2001 Allister Moon ECSPE. MTEF objectives. Aggregate fiscal discipline: an instrument to support sustained stabilisation

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Linking planning, policy and budgets : experience with MTEFs

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  1. Linking planning, policy and budgets : experience with MTEFs Public Expenditure Analysis & Management Seminar, May 22-24, 2001 Allister Moon ECSPE

  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 1992-01 • 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. 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

  11. 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

  12. Could have done better? • Hazards of restructuring the budget cycle with external players • Earlier , more systematic attention to problems in budget execution • integration problems : wage bill, development budget • scope for acceleration?

  13. Special factors? • Strong presidency, strong presidential commitment • MFEP management • absence of donor conditionality?

  14. Lessons from experience • Commitment from central agencies • Full integration in budget process • Incrementalism : delivering ‘interim’ results • Develop ‘bottom up’ sectoral coverage in step with increasing predictability • Prepare for engagement of players outside the executive • Plan for long haul

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