Posted by Ismail Manik, consultant, World Bank Institute*
The case of Tajikistan is illustrative of a not too ambitious yet well-sequenced attempt at introducing a Medium-Term Expenditure Framework (MTEF). The Ministry of Finance started initial work on an MTEF in 2000 but the effort did not have a major impact on improving budget planning. The rating from a recent PEFA assessment for the indicator PI-12, ‘Multi-year perspective in fiscal planning, expenditure policy, and budgeting’, is a D+. Another major problem was the fragmentation of the budget; for example the Ministry of Education and the Ministry of Health controls only around 9 and 10 percent of their sectoral budgets,** respectively.
A PER performed in 2007 provides a realistic assessment;
"The full introduction of the MTEF will take many years, and will need to be accompanied by complementary reforms to public financial management, such as strengthening of treasury systems, auditing, monitoring and evaluation and payroll management. One of the important findings of the World Bank study on the implications of weak PEM capacity for the PRSP approach, is that PEM reform should be undertaken in a holistic manner: improving one link in the PEM system will not generate better budget outcomes if other links in the system are unreformed and remain weak (Andrews and Moon, 2003).*** The Government will need assistance to implement the MTEF, and complementary PFM reforms, from donors; in particular, it will need technical assistance for the MOF and the line ministries in the pilot sectors."
In September 2006, the government of Tajikistan decided to (re)start the development of an MTEF and selected the education sector as the first pilot sector. The plan was to introduce this new MTEF in three phases (see figure: Download phases_of_a_mtef_proces.jpeg );
- Pilot MTEF in the education sector (2008-10);
- Further deepen MTEF (2009-11); include other priority sectors such as health and social protection sectors; and
- Expand the MTEF to all sectors by 2012 while fully integrating the MTEF with the annual budget and PIP process.
The MTEF development in Tajikistan, which was initiated after a good diagnostic of the public financial management system, is an interesting case to watch. It is not overly ambitious and the goals seems achievable. The sequencing appears realistic if capacity issues can be properly addressed. Other countries may well need to adopt such a ‘road less travelled’ approach to an MTEF and avoid getting carried away in incorporating too complicated performance management frameworks with MTEFs, at least in the early stages of the reform.
Notes:
* I would like to thank Zuhra Kurbanova of Ministry of Finance, Tajikistan for sharing the information on MTEF development.
** The figure is adapted from Table 4.2 in Tajikistan PER (2007)- I would highly recommend reading chapter 4 of the PER: ‘How can an MTEF be introduced in Tajikistan.’
*** Andrews, Matthew and Alister Moon (2003), PRSP and PEM Capacities in ECA PRSP Countries (mimeo), ECSP World Bank.
