Follow Us:

MTEF for Public Sector

This concerns the concept, methodology, process and country experiences of developing the medium term expenditure framework-MTEF


Bird, Andrew. 2003(a). Country Case Study 7: Design and Implementation Features of Medium-term Expenditure Frameworks and their Links to Poverty Reduction. London, Overseas Development Institute (ODI).

The first MTEF covered fiscal years 1999/2000-2001/02. A previous initiative, the Rolling Plan and Forward Budget (RPFB), introduced in 1992/93 had sought to strengthen links between development planning and the budget process. Although the RPFB is credited by the Ministry of Finance with having introduced multi-year budgeting linked to a macro-fiscal framework, in practice it suffered from a number of limitations. In response, the key concerns in introducing the MTEF were: (i) to provide a broad budgetary strategy within which the annual budget could be prepared; (ii) to strengthen links between sector policies and resource allocations; and (iii) to provide a mechanism through which analysis of budgetary performance could be fed back into the budget planning process. Introduction of the MTEF in Tanzania was linked to the PER process and Tanzania has used the PER process to move very quickly to a relatively well-developed and broad-based MTEF in which line ministries are directly engaged with the preparation of forward expenditure plans and there is extensive stakeholder consultati

Bird, Andrew. 2003(b). Country Case Study 8: Design and Implementation Features of MTEFs and their Links to Poverty Reduction in Uganda. London, Overseas Development Institute (ODI).

An MTEF exercise was initiated in Uganda in 1992 with the preparation of the Budget Framework Paper (BFP) prior to the finalisation of the annual budget. The BFP initiative was a response to two specific problems: (i) the deterioration in macro-fiscal performance that had occurred in 1991/92 when inflation increased to 100%; and (ii) the inability of the Government to meet its counterpart funding commitments on donor financed projects. The MTEF was initiated directly by the Ministry of Finance Planning and Economic Development (MoFPED) independently of any donor-led operation. MoFPED has continued to exercise strong leadership over the process and its subsequent evolution. Nevertheless, from an early stage the MTEF was used as an umbrella into which other WB and donor supported PEM initiatives were incorporated. Over the years, the scope of the MTEF has broadened considerably both in content and in stakeholder involvement. Thus, the initial focus of the MTEF analysis was on the macro-fiscal framework and on allocations to the major budget lines. Starting with the 1995 Budget Framework Paper, sector analysis was introduced. This initially covered education, health, agriculture, roads. After 1997 the MTEF analysis was extended to cover all sectors with the establishment of Sector Working Groups (SWGs) led by the line ministries. The MTEF exercise was extended to local governments (LGs) in 2000 with the introduction of Local Government Budget Framework Papers (LGBFPs). A requirement for submission of the MTEF to Parliament was introduced under the 2001 Budget Act. The MTEF in Uganda has been a considerable success. It has been credited with contributing to sustained macroeconomic stability; and with facilitating a significant shift in expenditure composition towards stated policy priorities. It has provided a mechanism for integrating the Poverty Eradication Action Plan within the Budget process; for linking expenditure planning at the central and local government levels, and with the introduction of LGBFPs for introducing medium term budgeting in LGs. Since 1997, the MTEF has been used as a tool for broadening stakeholder involvement in expenditure planning and review and for engaging donor agencies in the budget process consistent with their increasing involvement in budget-support operations.

Cambodian Rehabilitation and Development Board of the Council for the Development of Cambodia (CRDB/CDC). 2006. Annex 3: The Medium Term Expenditure Framework (MTEF) - Health Sector

Cambodia.CRDB/CDC, National Operational Guidelines for Development Cooperation Grant Assistance. Phnom Penh, CRDB/CDC, pp. 35-36.
This annex provides a sample description of the Medium Term Expenditure Framework
(MTEF) developed at the sector level. Annex 3 provides the conceptual framework of the MTEF for the Health Sector Strategic Plan 2003-2007.

Carlier, Krit. and Jennes, Geert. 2003(a). Country Case Study 1: Assessment of Benin’s MTEF. London, Overseas Development Institute (ODI).

The immediate reason to develop an MTEF in Benin was to confront the strategies formulated in the PRSP with the macroeconomic framework. The development of the PRSP started mid 2000 whereas the development of the linked MTEF started in 2001. The first MTEF developed in Benin concerned the period 2002-2004. The MTEF in Benin makes up part of a much larger public finance reform process supported primarily by the World Bank. Because of the extensive emphasis on budget reform, the Government of Benin is one of the most advanced in budget reform and also one of the most compliant UEMOA (Union Economique et Monétaire Ouest-Africaine) members. Furthermore, the introduction of the MTEF is mentioned as one of the conditions of the Poverty Reduction and Growth Facility (PRGF) of the IMF.

Carlier, Krit. and Jennes, Geert. 2003(b). Country Case Study 3: An Assessment of the Cameroon MTEF. London, Overseas Development Institute (ODI).

Due to failure of introducing some form of multi-annual planning of public finance in late 1990s, the World Bank changed its approach, and selected two pilot ministries - the Ministry of Public Health and the Ministry of Education - to develop both sector strategies and multi-annual financial planning. Alongside the sector strategies, a countrywide strategy was being developed with primary focus on poverty reduction in the form of the PRSP. The development of an MTEF started in 2000, with the objective of supplying a macroeconomic framework and attaching budget allocations to the PRSP process. The current state of the MTEF is at a first step, which includes discussions on allocations between the line Ministries and the Ministry of Economy and Finance, and even more important discussions on internal allocations within the line Ministries.

De Renzio, Paolo. and Smith, Samantha. 2005. Linking Policies and Budgets: Implementing Medium Term Expenditure Frameworks in a PRSP Context. London, ODI. (ODI Briefing Paper)

A common criticism of Poverty Reduction Strategy Papers (PRSPs) is that they represent a wish-list of policy measures which are poorly prioritised and too often de-linked from availability of financial resources in the budget. Medium Term Expenditure Frameworks (MTEFs) have been hailed as the solution to this problem, and introduced with donor support in a number of PRSP countries. However, the evidence so far is mixed, and highlights a number of factors which need to be taken into account to effectively link policy-making and budget processes. This briefing paper is based on nine country case studies which investigated the experience of implementing MTEFs in a PRSP context. The countries were Albania, Benin, Burkina Faso, Cameroon, Ghana, Rwanda, South Africa, Tanzania and Uganda. (Excerpts from the main text)

DFID Health Systems Resource Centre. 2002. Medium Term Expenditure Frameworks (MTEFs): An introduction. London, DFID.

A medium term expenditure framework (MTEF) is a multi-year public expenditure planning exercise that is used to set out the future budget requirements for existing services, and to assess the resource implications of future policy changes and any new programmes. This paper describes the role and value of an MTEF, and how it links with other initiatives such as sector wide approaches (SWAps), Poverty Reduction Strategy Papers (PRSP) and the Heavily Indebted Poor Countries Initiative (HIPC).

Holmes, Malcolm. and Evans, Alison. 2003. A Review of Experience in Implementing Medium Term Expenditure Frameworks in a PRSP Context: A Synthesis of Eight Country Studies. London, Overseas Development Institute (ODI).

The report is a synthesis of findings from eight country case studies from across Africa (Benin, Burkina Faso, Cameroon, Ghana, Rwanda, South Africa, Tanzania, and Uganda) and one from Albania reviewing experience with the implementation of MTEFs and the links being made to national poverty reduction strategies (PRSPs). The case studies were conducted in 2002 with the financial assistance of DFID and the EC. They followed a common checklist of questions which covered the main features of MTEF functioning, organisational and institutional integration and links with the PRSP (PRSP) and other strategic planning processes. An overview of this nine case studies is presented on this website.

Jennes, Geert. and de Groot, Albert. 2003. Country Case Study 2: Assessment of Burkina Faso’s MTEF. London, Overseas Development Institute (ODI).

The MTEF was introduced in 2000, on the occasion of the 2001 budget preparation. It is meant to provide a framework for the government’s program budgeting system. By determining for all line Ministries’ budgetary ceilings that are in line with macroeconomic and financial equilibrium, the credibility of program budgeting was to be improved. From the preparation of the 1999 budget onwards, program budgeting has been introduced in six line ministries. From 2002 onwards, all line ministries are required to apply program budgeting. The major progress achieved by the introduction of the MTEF is that line ministries respect their sectoral ceiling as provided by the MTEF while preparing their sectoral budgets. Before line Ministries practised blue-sky budgeting, while the amount allocated in the actual budget was in the end only a fraction of the requested amount.

Kanani, Alma. 2004. Case Study: Albania: Linking the Medium-Term Expenditure Framework and the GPRS. London, Overseas Development Institute (ODI).

This case study considers the experience with the introduction of the first MTEF in Albania covering the period 2001-03. The case study is relevant since an explicit objective in introducing the MTEF was to provide a mechanism for translating policy priorities identified through the Growth and Poverty Reduction Strategy (GPRS) into budgetary policy and actions, while also providing a realistic macro-fiscal framework within which to develop the GPRS proposals. A further objective has been to promote greater transparency and accountability in the budget process. The development of the MTEF and the GPRS had to take place with considerable institutional capacity constraints both in the Ministry of Finance (MoF) and line ministries, which had to be taken into account in the design of the process. Despite consequent limitations in its scope and analysis, Albania’s first MTEF was regarded by the MoF as a considerable success and highly influential in the setting of the 2001 Budget. Subsequent rolling forward of the MTEF in 2001 and 2002 sought to address some of the weaknesses in the initial MTEF and to make the framework a more operational instrument to support the preparation of the annual budget.

ODI. (no date). Implementing a Medium-Term Perspective to Budgeting in the Context of National Poverty Reduction Strategies. London, ODI. (Good Practice Guidance Note)

This Guidance Note is based on a Synthesis Report reviewing country experience with the implementation of Medium Term Expenditure Frameworks (MTEFs) and the links being made to national poverty reduction strategies (PRSPs). The Synthesis is based on nine country case studies: Albania, Benin, Burkina Faso, Cameroon, Ghana, Rwanda, South Africa, Tanzania, and Uganda. Except for the Albania case, which was prepared separately and is included with the kind permission of the World Bank author, all the cases were undertaken between June and October 2002 with the financial assistance of DFID and the EC. Consultants carrying out the case studies followed a common checklist of questions covering the main features of MTEF functioning, organisational and institutional integration and links with the national Poverty Reduction Strategy Paper (PRSP) and other strategic planning processes. This Guidance Note is an attempt to translate some of the main findings and messages from the Synthesis Report and the Case Studies into a set of principles and practices for those working in the field of public expenditure reform and poverty reduction. (Introduction in the publication)

Oxford Policy Management. 2000. Medium Term Expenditure Frameworks – panacea or dangerous distraction? Oxford, OPM. (OPM Review Paper 2)

The failure to link policy, planning and budgeting is the single most important cause of poor budgeting outcomes in developing countries. That is the view of the World Bank in its Public Expenditure Management Handbook (World Bank, 1998) and it has also been the experience of Oxford Policy Management when dealing with policy and budget issues in South Asia and Sub-Saharan Africa. The implementation of a Medium Term Expenditure Framework (MTEF) is increasingly being accepted as an appropriate response to the problem. In many respects MTEF has become the new panacea of public expenditure management – proposed as a cure not only for the inadequacies of planning and budgeting systems but also for the broader performance problems of government. It is not surprising that MTEFs should receive universal support. It is rational to plan and manage finances in an integrated manner, with a medium term perspective. Yet there are dangers in applying MTEF as a prepackaged solution to diverse countries’ budget problems. This article questions whether such a sophisticated mechanism is really the best place to start in reforming public expenditure management systems.

Short, John. 2003(a). Country Case Study 4: Assessment of the MTEF in Ghana. London, Overseas Development Institute (ODI).

The Government of Ghana implemented an integrated public financial management reform programme (PUFMARP) in mid 1996. The MTEF is one component of PUFMARP. The initial rationale for such reform was derived from the overall shift in Ghana from a planned control economy to a liberal market based economy. Regarding the MTEF, weakness in budget preparation was identified in the 1993 Public Expenditure Review (PER). The 1995 PER expressed the intention of institutionalising a MTEF as part of the normal budget process. The MTEF commenced in 1997 with assistance from WB, CIDA, EU and DFID. The introduction of the MTEF was initially planned on a pilot basis in three Ministries, Departments Agencies (MDAs) only, but was quickly extended to all MDAs. The MTEF approach to budgeting was introduced into the 1999 Budget.

Short, John. 2003(b). Country Case Study 5: Assessment of the MTEF in Rwanda. London, Overseas Development Institute (ODI).

The Public Expenditure Review (PER) 1997/98 recognised the potential advantages of introducing a medium term framework for expenditure management. The existing budget was of an incremental nature, focusing on inputs, relying on centralised controls and had a sharp separation in the planning of the recurrent and development budgets. In particular, the PER recognised that converting strategic objectives into concrete expenditure targets would inevitably require large shifts in the allocation of sectoral expenditures. Such shifts would be impossible to achieve over the course of one annual budget and would be difficult to manage in the absence of a medium term expenditure framework (MTEF). The PER recommended a gradual shift towards an MTEF system, starting initially with steps to: (i) decentralise budget authority from the Minister of Finance to the sector Ministers; (ii) improve the effectiveness of budget monitoring and expenditure control, particularly with regard to the salaries budget; and (iii) improve the information base for the evaluation and reform of sector policies and programmes through selective reviews of public expenditure in each sector.

Van Zyl, Albert. 2003. Country Case Study 6: South Africa. London, Overseas Development Institute (ODI).

In the middle of 1990s, the National Treasury embarked on an ambitious programme of budget reform, the most compelling reasons for which were problems inherent in the budget: a rising deficit, poor delivery of services and a lack of transparency and accountability. Against this background, the present MTEF was introduced in 1997 as part of a wide package of budget reforms in provincial and national government. The 1998/9 budget was the first year of implementation of the MTEF. The pre-budget report presented government’s overall fiscal policy objectives (balance between expenditure, revenue and the deficit) and its budget policy objectives (the relationship between spending decisions and policy priorities) for the forthcoming budget and the following two fiscal years. The MTEF was implemented across all departments as opposed to a focus on getting it right in some sectors. The Treasury was of the opinion that there were more benefits to getting estimates from all spending agencies than accurate analysis within a restricted number of sectors. There seems to be rationality in this – sectors differ so that lessons learned in some areas may not be easily transferred to analysis of other sectors. Demand creates its own capacity so that spending agencies will not begin to conduct analysis or collect data until they are forced to do so. The South African approach has placed greater emphasis on political involvement throughout the process than is the case in many other countries. The MTEF has endeavoured to involve politicians in overseeing and managing the entire process, for the first time creating a link between policy planning and budget drafting. This required overcoming a certain resistance on the part of politicians, partly by keeping the process simple and accessible, and making explicit the political accountability involved.

World Bank and Korean Development Institute. 2004. Reforming the Public Expenditure Management System: Medium-Term Expenditure Framework, Performance Management and Fiscal Transparency (Conference Proceedings), World Bank and Korean Development Institute.

An overview of the development of MTEF within the wider context of Public Expenditure Management is provided in the proceedings from a conference held in South Korea on “Reforming the public expenditure management system: medium-term expenditure framework, performance management and fiscal transparency”. The proceedings offered an opportunity to discuss a variety of policy recommendations and proposals. It is expected that these will provide momentum for reforming the public expenditure management system in Korea, and serve as references for fiscal reform in other countries as well. Moving towards a MTEF involves building upon the current budget and policy decision-making process, with an aim to overcome some of the current incentives in the process and improve public expenditure decisions and management. Discussion papers explore the stages of a MTEF process, the role of some of the key institutions in the MTEF process, and references international practices to illustrate points. Further papers discuss MTEF implementation in Korea through the starting point of reform, key issues for introducing MTEF and top-down budgeting, as well as the successful installation of MTEF to the Korean fiscal system. For comparison purposes, MTEF processes in Sweden, Germany, and in the United States (US) were presented. Discussions papers followed on performance management through an overall framework for reform, and strategy. Outlined were results based budgeting in Australia, and a case study in Sweden and the US. Finally, discussions focused on fiscal transparency, covering public finance in Korea, and the information flow for a successful MTEF operation and its implications for the Government of Korea. (Abstract from the World Bank)

Back to List