Posted by John Zohrab, FAD regional PFM advisor for Central Asia
The IMF’s Fiscal Affairs Department (FAD) and the Kazakhstan Ministry of Economic Development and Trade (MEDT) recently jointly hosted a regional workshop on macro-fiscal forecasting and medium-term budgeting issues. It was co-financed by the Government of Japan, through its technical assistance program Safeguarding Financial Resources in Central Asian Countries (JSA Program), and the MEDT.
The workshop took place in Almaty May 26-27, 2011. Representatives from Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyz Republic, Russia, Tajikistan, Turkmenistan and Uzbekistan participated in the workshop. They were mainly department and division chiefs from ministries of finance, ministries of economy, and economic research institutes under the ministries.
In his opening remarks, Mr. Suleymenov, Vice-Minister of the MEDT, emphasized the need for improved macro-fiscal forecasting and medium-term budgeting in the aftermath of the global financial crisis.
Mr. McHugh from FAD outlined the methodology and empirical results of FAD’s new approach to fiscal risk monitoring. This involves two complementary tools for assessing risk—a fiscal vulnerability index and a fiscal stress index—combined into a single fiscal sustainability index.
Mr. Shand, an FAD expert, summarized international experience and best practice in implementing medium-term expenditure frameworks (MTEFs). He noted that both econometric analysis and case studies have concluded that MTEFs have improved aggregate fiscal discipline and allocative efficiency. He also listed ways in which the frameworks should be improved in many countries.
Mr. Zafra, a World Bank consultant, discussed the issue of aligning sectoral policies with the medium-term budget framework. He illustrated how detailed programs and policies can be reviewed and integrated with the medium-term budget framework and related strategic plans through program budgets.
I discussed the key factors and challenges of integrating medium-term budgeting into the budget management system, and also outlined how integration can be a creative force in PFM and how this can be reinforced in the application of medium-term budgeting.
Representatives from each country delivered presentations highlighting their recent experience and plans in macro-fiscal forecasting and medium-term budgeting. These presentations showed the current output of macro-fiscal modeling in various countries, the different macro-fiscal modeling approaches used, the current medium-term budgeting processes, the problems and challenges being faced, and how improvements to macro-fiscal forecasting and medium-term budgeting fit into overall PFM reform strategies. The feedback reflected a positive impression from the participants of the workshop.
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