Medium-Term expenditure frameworks (MTEF)

1. Medium-Term expenditure frameworks (MTEF) • Discussion note • PLF Salzburg • 09-10/October/2013

2. MTEF • MTEF REFORMS IN THE WORLD • 2/3 of all countries • Impact on budget management and fiscal performance – varies widely across countries • IMPROVING IMPACT OF PUBLIC POLICY • Multi-year budgeting: government-wide strategic policy and expenditure framework • Fiscal discipline: shows impact of current policies on government balance in the coming years • Performance of public policies: efficient allocation of resources (within ceilings) to strategic priorities between and within sectors • Improved link of strategic budgeting with budget preparation process: • Reconciliation of top-down (resource envelope) with bottom-up (strategies and resource needs) • Shift of budgetary logic from “needs” to “available resources”- line ministries play a key role in determining the effectiveness of MTEFs

3. MTEF stages, forms - gradual development MTPF MTFF MTBF - Former Yugoslav Republic of Macedonia - Montenegro - Serbia • Albania • Kosovo • Turkey - … Turkey

4. HRD policies • LONG-TERM IMPACT • Predictable resource envelopes over the medium-term • MULTIPLE INSTITUTIONS • Enhanced coordination • Priority setting (within and btw sectors) • Collective negotiation MTEF supports

5. Issues encountered frequently • Costing of sector strategies: numerous…but not all accompanied by Action Plans and costing • Coverage: public funds; donors’ funds; other sources • Combination of multi-annual budgeting with the practises of annual incremental budgeting • In several countries the multi-annual budget in reality coexists with practises of annual budgeting • Ceilings: unclear links of multi-year estimates to annual budget ceiling • Complexity of planning layers

6. EU: MTBF Indexhttp://ec.europa.eu/economy_finance/db_indicators/fiscal_governance/framework/ MTBF survey - European Commission surveyed existing MTFBs and current budgetary procedures across EU Member States via several rounds of questionnaires (2006, 2008, 2009, 2010 and 2011). The information collected on budgetary procedures, medium-term frameworks and Stability and Convergence Programmes covers issues of preparation, status, implementation, and connectedness with the budget (including supplementary and corrective budgets). This information is available in a database reflecting the situation as of 2011. Index builds on the database Index The index captures the quality of the MTBF through five criteria: existence of a domestic medium-term framework, connectedness btw the multi-annual budgetary targets and preparation of annual budget, involvement of national parliaments in preparation medium-term budgetary plans, existence of coordination mechanisms between general government layers prior to setting the medium-term budgetary targets for all government tiers monitoring and enforcement mechanisms of multi annual budgetary targets

7. FRAME RIA – and MTEF Examines synergistic relationship: Between sector strategies and wider national national and public investment plans Assesses institutional capacities to; • Link sector strategies with the MTEF and budget • Involve multiple stakeholders in realistic strategy design, • Cost sector policies • Set policy priorities within ceilings • Monitor budget implementation in view of performance objectives

8. Guiding questions • How can MTEFs support the shift towards better coordinated HRD policies within a complex multi-ministry context? • Role of Ministry leading the MTEF • Actions coordinated among ministries (policy cycle, collective negotiation) • Other stakeholders’ involvement (e.g..: civil society) • How can RIA support improvements in the functioning and effectiveness of the MTEF process with respect to the HRD sector? • Line ministry level • Ministry of Finance level • Municipal / local level