The document discusses medium-term expenditure frameworks (MTEFs) and their advantages, including providing greater certainty in planning, facilitating top-down budgeting, and making budget gimmickry harder. It defines MTEFs as identifying resource availability and current spending needs over a multi-year period, usually 3-5 years, to determine future resource allocations. Baseline projections are also discussed as estimating spending if current policies remain unchanged. However, the document notes that few countries implement MTEFs well due to issues like lack of integration into the budget process and lack of robust costings and up-to-date baselines.

1. Medium-Term Expenditure Frameworks
and Independent Fiscal Institutions
Jón Ragnar Blöndal
Head of Budgeting and Public Expenditures
8th Annual Meeting of Parliamentary Budget Officials and
Independent Fiscal Institutions
Paris, 12 April 2016

2. Advantages of MTEFs
• Multi-Year Orientation
–Greater Certainty in Planning Horizon
–Even-Footing for Single-Year and Multi-Year
Proposals
–Annual Appropriations and Permanent
Appropriations
• Prerequisite for Top-Down Budgeting
–Budget Reflects Political Prioritization
–Internal Reallocations; Less “Auto” Increases
–Budget Gimmickry Becomes Harder

3. MTEFs - Definition
• Identify Resource Availability
─ Economic forecasts
─ High-level fiscal rules such as aggregate revenue,
expenditure, deficit/surplus and debt/assets
─ Multi-year context (3-5 years)
• Determine Current Spending Needs
─ Baseline projections of “current policy” expenditures
─ Multi-year context (3-5 years)
• Reconcile the Two to Determine Future Resource
Allocations

4. Baseline Projections
• Multi-year estimates of spending under the
assumption that current laws and policies remain in
place
–At the same level of detail as the annual budget
–Foundation for the annual budget process: First year
beyond the budget becomes the budget for that year if no
policy changes
• Primary importance to keep the baselines up-to-date
throughout the year
–Following each Cabinet meeting
• Costing
–Roles and Responsibilities
–Lapsing programs / “Sunset clauses”
–Dynamic Scoring

5. MTEFs – Issues
• Very Few Countries Do MTEFs Well
• A Completely New MTEF Every Year
• MTEF’s Not Integrated into Budget Process
– Different Formats
– Stand-Alone “Special MTEF Units”
• Baselines Not Kept Up to Date
• Costings Not Robust
• Lack of Political Commitment
• MTEF’s Implemented in isolation
– Top-down Budgeting