Background on reforms
Definitions of MTEF and PBB
MTEF is a central component of many public expenditure
management reform programmes (World Bank 1998; Le
Houerou and Taliercio 2002). While the exact structure of an
MTEF may vary, the framework generally includes three
components: more realistic medium-term estimation of available
resources, early identification and agreement on strategic
priorities and performance-based estimation of resource needs.
First, MTEF introduces advanced modelling procedures which
are intended to provide better estimates of the total resource
envelope available. Second, the MTEF process is meant to help
countries identify competing priorities for funding which can
then be debated and decided during the budget formulation
process, rather than during budget execution (Schiavo-Campo
and Tommasi 1999). Finally, MTEF is intended to change the
orientation of budget preparation within each Ministry from a
‘line-item’ focus towards ‘performance budgeting’ based on
defined objectives and activities. Rolling 3-year budgets are
created and new budget classifications may be introduced to
allow monitoring of expenditure in relation to programme
activities and performance indicators. This is intended to
increase accountability. Figure 1 illustrates the steps in a
general MTEF framework.