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Multiyear Expenditure Frameworks: Objectives, Preconditions, and Lessons from Uganda

This document explores the objectives and preconditions for implementing Multiyear Expenditure Frameworks (MTEFs), emphasizing aggregate fiscal discipline, strategic allocation, and technical efficiency in public sector budgeting. It highlights Uganda's development of its MTEF from 1992 to 2000, detailing key phases such as macroeconomic frameworks and expenditure plans linked to policy objectives. The text outlines critical preconditions for successful MTEF implementation, including macroeconomic stability, commitment from Cabinet, and sector capacity. Additionally, it shares lessons learned to achieve effective budget processes.

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Multiyear Expenditure Frameworks: Objectives, Preconditions, and Lessons from Uganda

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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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