Medium Term Expenditure Framework > Public expenditure management

What's the future of MTEF?

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Napodano:
In the last years several practitioners have voiced their concern that perfromance-based budgeting is too a sophisticated tool for an initial budget reform process, especially in developing and transition countries. Some of them advocate a 'back-to-basic' strategy by which the main economic items are efficiently controlled and managed.

What is your take on this?

To start the debate I provide a link of an MTEF brief prepared by OPM in 2000 aptly titled:
"Medium Term Expenditure Frameworks: panacea or dangerous distraction?"
http://siteresources.worldbank.org/INTPEAM/Resources/OPMMTEFReview.pdf

STONE:
This could be lively!  Thanks for the reminder, I have been meaning to go back to that paper and refresh my memory.  I'll also contact the author and see if he wants to contribute and to see how his views have developed in the last ...decade. 

STONE:
We might ask first what is an MTEF?

The origins of the Medium Term Expenditure Framework go back I think, at least, to the preliminary work done in the World Bank leading up to the production of the Public Expenditure Management Handbook.

But we also have Medium Term Fiscal Frameworks MTFF (harder to pronounce as a word then "emteff", but then that was never going to win a prize for beauty of expression) that was intended to catch the fact there's more to budgets than just the expenditure side - also why we have gone from PEM - public expenditure management to PFM - public financial management.  We have Medium Term Budget Framework - MTBF.  I once internet searched MTBF (can we advertise here? or do we have to use Blue Peter like terms - sorry for the parochialism) and came up with references to an IT concept called Mean Time Between Failure, which I thought might support the anti-MTEF camp, but there it is.

The Government of Albania, very helpfully in my view, translated MTEF into PBA Programi Buxhetor Afatmesem, which mirror translates into English as Medium Term Budget Programme - MTBP.

We might also ask what its past has been. 

The complaints about "too sophisticated" are often heard when, as many have experienced in the past, it has been a case of 'persuading' a Government that an MTEF is good for them - difficult to start and implement but somehow worth it in the end (whenever that might be).  They have been less frequent once MTEFs became a requirement under the Poverty Reduction Strategy and, as I believe, when recent and future members of the EU were required to have them.

In my view the "MTEF" has lost its original meaning and is now a term that is used to mean something like programme performance budgeting in a medium term context - but we are unlikely to hear PPBMTCs tripping of tongues.

I'll go back to the panacea - distraction piece and think a bit more.

Martin Johnson:
I think many practitioners would agree that many of the environments they come across are characterised by policy, planning and budgeting systems that are opaque and sometimes plain impenetrable, with little in the way of planning and lip service links to policy. Think of that budget book that pops up here and there, sometimes a foot thick in all its volumes (printed on infeasably thin paper) with mind boggling detail showing planned spending on stationary and other crucial-to-know items for the lowest administrative level covered. One can only guess the links to policy and wonder at what all that detail of spending is meant to deliver. But it does offer control ... and when commentators begin to suggest that MTEF approaches to planning and associated performance influenced budgeting are too complicated, what getting back to basics effectively means is good old line item control (nothing wrong with that of course) but with a random walk towards both outputs and whatever policy goals and objectives that decision makers cross their fingers will be achieved.

At the end of the day, if public services are to be delivered as intended, there is no short-cutting the fact that policy must be costed at some point in broad terms and then that costing must be tested in the much more detailed environment of annual and medium term budgeting and set against the real resource constraints of budget allocations. If the required outputs cannot be delivered as intended in the time planned, then adjustments must be made and the implications for policy understood. There is nothing really complicated about this of course. Detailed, yes. Complex, no. As we have discovered plainly in Albania, once the rules of the game are established in the form of systems and procedures, the detailed work that is then required depends almost exclusively on determined and consistent management. Good systems that do not work are that way not because of complexity but because of the attendant requirement for good old fashioned management.

That being said, 'emteff' all too often falls foul of being a distraction ... largely because the acronym tends to be regarded as a panacea among a seemingly large body of people who seem to confuse reform with achievement ... but that is for another post.

petagny:
I fear that the ‘MTEF’ at least as a piece of terminology might have been fatally wounded on several counts:

Firstly, it has been too closely associated with a prescriptive donor agenda and has become intimately linked to the PRSP (or its equivalent). I think of the MTEF as a largely value-free process reform that could, in theory, be used to implement ‘pro-rich’ policies just as easily as ‘pro-poor’ policies. Although we may prefer some version of the latter, I do not believe that this association has necessarily served us well in assisting governments with the introduction of the MTEF approach. Now unfortunately, the ‘MTEF’ is seen, both by partner governments and many advisors, as part of the package of donor stuff’running parallel to the normal business of government.

Secondly, the MTEF and performance-oriented budgeting have in many cases become almost synonymous. Certainly, introducing a strong performance-orientation to budgeting is almost impossible outside a medium term framework, but an MTEF can, potentially, achieve a lot without a strong performance dimension.  Look back at the World Bank’s 1998 Public Expenditure Management Handbook; although the MTEF is seen as having a potential impact on aggregate fiscal discipline, on strategic resource allocation and on the efficiency and effectiveness of public spending, the lower down this list one goes, the more important accompanying changes in other institutional processes become, i.e., changes outside the budgetary system. In my view, the downfall of the MTEF in many countries has been a premature focus on the performance dimension in conditions where accompanying institutional changes in these other areas are unlikely to materialise any time soon. A lot can be achieved by focusing on the aggregate fiscal discipline and strategic resource allocation dimensions, i.e. creating an environment in which prioritisation can realistically be expected to take place. And, quite frankly, what chance is there of successfully implementing performance-oriented budgeting if a basic process of top-down, medium term ceiling setting at the aggregate and sector/ministry level is not already institutionalised?

Thirdly, the ludicrous notion of ‘sector MTEFs’ – as opposed to a whole of government approach – has sown a lot of confusion and, in some countries, it might be difficult to step back from this. Not much different from this are the extended pilots in certain key sectors, which never gain credibility because the roll-out of the full MTEF always seems to be somewhere over the horizon.

Is it therefore time to rebrand the ‘emteff’ and restrain our ambitions so that they are more in line with the capacities and political realities of client governments?

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