Posted by Ismail Manik, consultant, World Bank Institute
An interesting recent working paper by Clay G. Wescott, of the Asia Pacific Governance Institute, has a good review of country experiences with MTEF implementations. The working paper is a background paper to the World Bank’s Independent Evaluation Group’s report ‘Public Sector Reform: What Works and Why?’
Some excerpts are quoted below:
- "In another example, Bank support was instrumental in initiating the MTEF process in Albania. By establishing close linkages with the activities financed by both the World Bank (Structural Adjustment Credit, PRSC series, Public Expenditure and Institutional Review) and other development partners (primarily), the Bank helped create momentum for the MTEF process. In addition, the number of ministries that prepared sector strategies linking expenditures to strategies increased from 4 in the 2001-03 MTBP to 10 in draft 2006-08 MTBP. A technical assistance for macroeconomic and fiscal analysis supported by the Bank developed an input-output model for better economic forecasting. Improvement in revenue predictability suggests strengthened capacity for macroeconomic and fiscal analysis…"
- "Vietnam started piloting MTEFs with Bank support in 2005 with 4 ministries (comprising 60 percent of ministerial spending) and 4 provinces, based on a medium-term fiscal framework encompassing all government spending. Reportedly, these reform processes are helping policy makers become more aware of mismatches between resource allocations and intended results. However, additional work is needed on improving investment appraisals to achieve greater development effectiveness…"
- "Ghana, which has made good progress in PFM overall, has a "C" rated MTEF, with weak links to the annual budget, limited debt sustainability analysis, sector strategies not fully costed, and weak links between investment and forward expenditure estimates. Part of the problem is that work on the Ghana Poverty Reduction Strategy focuses on the design of new tools, such as medium term priority programs, rather than on programming expenditure through the MTEF and annual budget …MTEFs in Kyrgyz Republic’s (“D” rated), Honduras and Bangladesh (both “D+” rated) are still in the early stages of development, and most of the benefits have yet to be realized (Oxford Policy Management 2006; World Bank 2005b, 2006f). In the case of Guyana, the Bank's work on procurement, audits, and coordination of capital and recurrent budgets was appropriate in its focus on basic systems; initial Bank support to developing an MTEF was reportedly premature, given the unmet challenges of the annual budgeting process…"
- "Mali’s MTEF had the top “A” rating in its 2004 HIPC tracking exercise (question 7). However, a more recent assessment finds inadequate integration among the many tools developed to support reforms, including the MTEF, the sector MTEFs, the macroeconomic framework, the new budget nomenclatures, and the multi-year investment program. Timetables of the different exercises aren’t properly synchronized. Sector MTEFs are prepared mainly to satisfy donors, and are separate from the program budget process…"
"In summary, MTEFs and related innovations were in some cases successfully adopted, and proved helpful both in strengthening government’s PFM, and the predictability of funding from donors. Yet, in other cases, MTEFs haven’t yet delivered expected benefits."
For Discussion:
- What entails a ‘fully functioning MTEF’? In evaluating the success rates for MTEFs should more weight be given to technical aspects versus political process and commitment? Is the study's use of one HIPC or PEFA indicator adequate to capture the MTEF concept (Note -- neither indicator was designed or labeleld as an MTEF indicator)?
- Should MTEF implementation be sequenced with a sectoral emphasis? Should countries focus on “getting the basics right” before embarking on MTEFs?
