MTEF, policy based budgeting and MDG based PRS Concepts, practices and some critical issues

Transcription

1 MTEF, policy based budgeting and MDG based PRS Concepts, practices and some critical issues Pôle régional d appui aux CSLP, PNUD Dakar November 1, Lusaka regional workshop on macroeconomic analysis for MDG based planning

2 Introduction MTEFs are presented as the main solution to help integrating public policies in budgets Examining this question requires a budget management perspective on policy planning techniques, including MDG based PRS Goals of this presentation (and of our work): Understanding the observed gap and compatibility problems between budgeting and planning practices Trying to adress critical questions to design decision making system, reforms and capacity building actions Help current work beeing better integrated and operationalised

3 Outline 1. MTEF: variety behind a generic concept Definition and objectives In practice a wide range of policy based budgeting techniques and instruments 2. Policy based budgeting: basic elements Macro framework in a policy based budgeting perspective 3. Actual practices: mixing different types of instruments 4. Critical issues Main challenges Accountability perspective and role of PRS

4 1. MTEF : definition and objectives Usual definition : The MTEF consists of a top-down resource envelope, a bottom-up estimation of the current and medium-term costs of existing policy and, ultimately, the matching of these costs with available resources. The matching of costs should normally occur in the context of the annual budget process, which should focus on the need for policy change to reflect changing macroeconomic conditions as well as changes in strategic priorities of the government. WB PEM Handbook 1998 MTEF is expected to help gearing expenditure - reallocating and increasing - towards pro-poor/mdg consistent spending: Assessing sustainability : confronting envelopes, costs and objectives Studying allocations and trade offs to enable gradual fiscal adjustment Favoring predictability and enabling to monitor performance

5 1. MTEF: Diversity of tools behind a generic concept Diversity of products, instruments and processes Global MTEF or MTFF as multi-year macro-budgetary framework and interministerial / sectoral allocation Budgetary translation of a costed MDG based PRSP Sector MTEFs as pluri-annual expenditure plans for a given ministry /sector dealing with intra-sectoral allocation MTEF as a process within budget and policy formulation procedures and cycle encompassing calendar, determination of ceiling, policy proposal, links between centre and line ministries Can be seen as s generic concept advocating for basic policy based budgeting principles Time horizon policy definition Budget documentation and analyses to implement a strategy Performance orientation Strategic phase in budget discussions

6 2. Policy based budgeting perspective: basic dimensions PFM critical issues to implement policies and make budget an instrument Comprehensiveness Unified process (current / investment) Clarity and predictability of budgeting procedure Reporting capacities to feed a rolling cycle Budget readability, analysis and documentation Classification issues Administrative, economic, functional (which is analytical) Programmatic, output based Which use of classifications? From programming phase to budget law preparation, reporting and control Incremental, program based allocations, zero based Correspondence between sectors and ministries / budgetary units (strategic planning) Formulating strategies Using simulation models for example MDG tools or more complex behavioral models Plans of action : For example PAP, PIP Links with budget to be assessed

7 2. «Unbundling» MTEFs from a policy based budgeting perspective «Unbundling» MTEF role within PFM reforms Use of classifications Budget calendar Circular letter / use of sectoral ceilings Coverage: all ministries, global only, priority sectors etc. technical specification and different technical steps to build an MTEF Estimating cost of current policies with budget figures Estimating cost of new measures Deciding objectives and trade-offs Projecting sectoral envelopes in budget terms etc. For various MTEF solutions Feasability given PFM capacities Benefits to be expected taking into account administrative sustainability Sequencing issues for MTEF design and expected use given PFM practices Gradualism Scaling-up strategies given PFM capacities

8 2. Macroeconomic framework and top down budgeting Linking macroeconomic work and macro-budgetary projections Which links from macro models projections to macro-fiscal framework and MTFF preparation? Macroeconomic projections necessary to derive ministerial ceilings from a global enveloppe enabling trade-off mechanisms, Enable performance orientation Requires : Calendar Comprehensiveness Unified process with a global enveloppe Consolidated sectoral figures

9 3. Actual practices: mixing various and (sometimes contradictory) types of instruments and procedures Planning exercises conducted at countru level Stand alone sectoral MTEFs / program budgets Use of simulation models (health, education etc.) Existing strategies that are not properly costed PRSP and MDG Autonomous organization and institutional structure Techniques (relationship between PAP, PIP, NA) Budget preparation Coexistence between activities and input based budgeting Links between budget and planning calendar for all sectors Role of global MTEF and role of multi-year estimates

10 3. Actual practices: looking for MTEFs? Unclear use Sectoral or centralized process? Link with MDGs? Status of forward years estimates? Links with PIP / PAP? Links between evaluation of costs, global allocations and budget appropriations?

11 4. Challenges Sequencing the use of planning instruments and budget reforms Global coherence and developing a global perspective concern on planning and budgeting activities Avoiding strictly contradictory and/or redundant activities

12 4. Role of MDG based PRS in linking budget and planning : strengthening accountability Coherence issues and expectations Sequencing Coordination Accountability: incentives, ownership and capacities in budget management Capacity building: technocratic vs political economy of reform

13 Conclusion MDG based PRS useful framework to articulate diverse instruments and objectives Requires a global perspective on decision making process Our pole is developind an analytical framework for such a perspective and intends to derive priority technical works