Public expenditure management and the medium term fiscal framework
Download
1 / 13

Public Expenditure Management and the Medium-Term Fiscal Framework - PowerPoint PPT Presentation


  • 531 Views
  • Uploaded on

Public Expenditure Management and the Medium-Term Fiscal Framework Workshop on Bhutan Public Expenditure Management August 16-20, 2004 Christian Eigen-Zucchi The World Bank What is an MTFF?

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Public Expenditure Management and the Medium-Term Fiscal Framework' - jana


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Public expenditure management and the medium term fiscal framework l.jpg

Public Expenditure Management and the Medium-Term Fiscal Framework

Workshop on

Bhutan Public Expenditure Management

August 16-20, 2004

Christian Eigen-Zucchi

The World Bank


What is an mtff l.jpg
What is an MTFF? Framework

  • Typically consists of integrated macroeconomic and revenue projections, and a policy commitment to a set of strategic fiscal policy goals.

  • An MTFF is a first step of an MTEF in moving the budget process from a needs basis to an availability basis – determines the aggregate resource envelope.


Going back to the three objectives of public expenditure management systems l.jpg
Going Back to the Three Objectives of Public Expenditure Management Systems…

  • Macro-fiscal discipline and stability

    • Avoid public finance crises or the need for major adjustments

    • Support economic growth and macroeconomic stability

  • Strategic allocation of resources

    • Match government policy with programs, objectives

      (allocative efficiency).

  • Technical efficiency

    • Getting the most from each ngultrum spent


Macroeconomic projections l.jpg
Macroeconomic Projections Management Systems…

  • In order to develop sound revenue forecasts, some key macroeconomic variables need to be projected

    • GDP growth

    • Inflation

    • Power sales

    • Tourist arrivals

    • Others?


A robust multi year projection of revenues l.jpg
A Robust Multi-year Projection of Revenues Management Systems…

  • Base revenue projections on the forecasts of key macroeconomic variables.

  • Build from the bottom up.

  • Seek coherence across agencies.

  • Refine and improve methodology over time.


Commitment to fiscal path l.jpg
Commitment to Fiscal Path Management Systems…

  • Choose fiscal targets deemed consistent with:

    • Desired macroeconomic path (inflation, external accounts, available finance).

    • Overall strategic policy goals (such as size of government as a share of GDP, pillar of 9FYP of fostering private sector led growth).


Commitment is essential l.jpg
Commitment is Essential Management Systems…

  • The key to the credibility of the targets is the extent to which expenditure adjustments would be made to compensate for any revenue shortfalls.

    • If no adjustments would be made, then the targets are purely notional, and not likely to be met.

    • If serious spending adjustments would be demanded of the line ministries in the event of a revenue short-fall, then the targets become meaningful (AP example).


Step 1 macroeconomic and public sector envelopes l.jpg

Macroeconomic Estimates Management Systems…

Fiscal Policy

Revenue Estimates

Expenditure Estimates

(current services)

  • Affordable/sustainable Fiscal Envelope

  • Monetary and Fiscal Policy

  • Debt and Deficits

  • Aid flows

Expenditure Estimates

(current law, normatives)

All in multi-year context

Step 1. Macroeconomic and public sector envelopes


The mtff process gives l.jpg
The MTFF process gives… Management Systems…

  • A more predictable resource envelop over a medium-term horizon.

    • For example, the overall balance target, say a deficit equivalent to 5% of GDP, combined with a revenue forecast equal to 35% of GDP, yields an aggregate fiscal envelop for spending of 40% of GDP.

  • A commitment from the Government to follow a sustainable fiscal policy.

  • Key step in moving budgeting from a needs to an availability basis.


Capacity is a significant issue l.jpg
Capacity is a Significant Issue Management Systems…

  • Technical

    • Staff skills

      • policy analysis, macro forecasting, budget examination

  • Policy

    • Capacity to enforce hard budget constraints

    • Commitment to a continuous process of improvement


ad