Tongo Medium Term Budget Framework

Tongo- Budget Process

Timor Leste Budget Time Table

An aggregate fiscal envelope for the budget year and fiscal envelopes by line
ministries and main economic expenditure categories are set annually; changes from
year to year are mainly incremental with few adjustments to reflect the changing
government priorities. In May, the MOF prepares the fiscal envelopes based on the macroeconomic projections and national priorities. The allocation of aggregate fiscal envelope between recurrent and capital
budget is not based on a clearly defined methodology, and the capital budget fiscal envelope
is not allocated to the line ministries individually. Both aggregate and detailed fiscal
envelopes are discussed and endorsed by the COM, followed by the issuance of instructions
in the budget circular to the Organs of State12 to submit their capital budget projects by mid-
June and recurrent budget proposals by end-June. The circular provides guidelines on the
preparation of annual action plans (AAPs), capital projects, new initiatives, and includes
fiscal envelopes of recurrent budgets by line ministries. The MOF provides the unit costs for
formulation of certain expenditures as supplementary guidelines. Line ministries generally
submit budget requests above the provided fiscal envelopes; in 2009, the requests were on
average 35 percent higher.

Paper for Discussion next week on the blog

The following working paper from IMF;

The Challenge of Reforming Budgetary Institutions in Developing Countries;

Summary: The paper notes that the development of sound budgetary institutions in countries such as France, the U.K. and the U.S. has taken a very long time?200 years or more?and is still evolving. It discusses Douglass North's prediction 'which is supported by available data that institutional reform is also likely to be very slow in developing countries since the budget is especially prone to rent-seeking influences. Finally, the paper discusses the currently fashionable emphasis on complex, multiannual PFM reform strategies, which have been strongly promoted by the donor community; and advocates a simpler approach grounded on Schick's important principle of "getting the basics right." The paper identifies several areas where further research would be fruitful.

The latest edition to Fiscal Responsibility Laws

The Fiscal Responsibility Law adopted by parliament on November 17 provides a domestic anchor for fiscal policy and is in line with the program. The law introduces numerical and procedural rules for the preparation of annual budgets, including the obligation to achieve a decline in public debt in real terms, the prohibition of primary deficits, compliance with medium-term expenditure ceilings, and the requirement to offset the impact of legislative initiatives on the budget balance. During a transitory period, which applies to the preparation of budgets for 2010-12, the projected growth of real expenditure cannot exceed half the projected growth of real GDP. The law also establishes a fiscal council, consisting of three wise persons and a secretariat. The council, which should be operational by the end of 2009, will prepare macroeconomic forecasts and projections of budgetary aggregates; it will also assess the budgetary impact of draft legislation (scoring) and make recommendations on corrective actions when needed. Finally, the council will have an advisory role, providing information and assessments to all branches of government upon request. The authorities and staff agreed on the importance of implementing medium-term budget preparation and planning, and of providing the fiscal council and its secretariat with a budget appropriation commensurate to its mandate

-Hungary - Stand-By Arrangement - Interim Review Under the Emergency Financing Mechanism

Related;
The outlines of the Fiscal Responsibility Act

The Fiscal Council

- prepares macro-economic forecasts;

- prepares baseline projections for the budget figures;

- prepares methodological recommendations relating to fiscal planning, forecasting and impact assessment;

- prepares estimates, both following submission to Parliament and before the final vote, concerning the fiscal effects of the budget bills and supplementary budget bills as well as any other bills discussed by Parliament that may have an impact on the development of mandatory items;

- may prepare estimates concerning the budgetary impacts of draft bills other than those indicated above, as well as of motions for amendment submitted in the first or second phase of the Parliamentary debate or before the final vote which are subject to parliamentary decision;

- provides information, upon request, to the President of the Republic, the parliamentary commissioners, the president of the State Audit Office, the governor of the National Bank of Hungary and the committees of Parliament concerning issues within their competence;

- informs the budget committee of Parliament or the Government about its legislative recommendations to promote the maintenance of fiscal discipline and the transparency of public finances;

- comments on draft legislation relating to fiscal accounting rules.

Budget Simulation Model and its explanation

Performance Budgeting in Mauritius

2009 Budget Circular

Manual for Programme-Based Budgeting (PBB)

Namibia - Budget Calender

The MTEF has the following key characteristics:

• It sets out the macro-fiscal framework for the coming three years, reviews government fiscal policy objectives, and provides expenditure ceilings for the operational and development budgets by Vote.
• The allocation of resources and expenditure priorities are set in line with Namibia’s Vision 2030, and National Development Plans.
• The MTEF is supported by MTPs prepared for each Vote. The MTPs set out, for each Vote, the total resources allocated to each Program, the main activities to be carried out under each Program, and how the Programs will help to achieve the ministries’ objectives which contribute to the overall national development objectives. The expenditure plans are linked to socioeconomic variables in the PEMP.
• The MTEF covers a period of three years, but is revised every year. It thus serves the purpose of threeyear rolling budget and also an annual budget. The Votes also include statements on financial operations of some special funds and state-owned enterprises falling under the respective ministry.
• The MTEF is regarded as the main budget document, and detailed information on the budget estimates is presented in the accompanying books—Estimates of Revenue and Expenditure and the Three-Year Rolling Development Budget.

The MTEF in Namibia, in principle, could offer several major advantages:

• Its medium-term perspective enables a rationalization and improvement in the sectoral and intra-sector allocation of resources in terms of Government priorities.
• The MTEF expands the budget coverage by including donor and other extra-budgetary funds.
• It integrates the operational and development budgets and relates recurrent costs to capital expenditure.
• It puts increased emphasis on performance as programs are expected to be planned and costed with a view to produce outputs that in turn should achieve objectives.

In practice, the MTEF process is still in its early stages and falls short of its potential as a tool for rational allocation of resources, review of priorities, and decision making. In particular:

• While the MTEF is presented by Vote Programs (through the MTPs), the detailed budget estimates for each Vote continue to be shown by Divisions and Sub-divisions (economic items). The expenditures are classified and recorded by Divisions and Sub-divisions alone. Thus, there is as yet no explicit link shown between the Vote-level Programs in the MTEFs and Votes, Divisions and Sub-divisions, and thus the report on the budget implementation through the Appropriation Accounts and the Audit Report. Hence it is not possible to compare what was supposed to have been spent on programs with what was actually spent.

The MTEF process is currently largely top-down, concentrating on the aggregate expenditure amounts. The bottom process for feeding back into the MTEF ceilings is limited; this also hampers the Government’s ability to use the budget as a strategic tool for achievement of its development goals.
• Expenditure allocations still seem to follow an incremental basis; estimates for the two out years do not reflect reprioritization or genuine costing of programs, but seem to be derived by applying uniform growth factors.

The Ideal Central Finance Agency?

Estonia Ministry of Finance Organization Chart;


Source: Budgeting in Estonia

Related;
Budgeting and Fiscal Management in Transitional Economies

Estonia: Fiscal Management and the Budget Process

Fiscal Transparency -ROSC 2001, update in 2002


2008 Article IV Consultation for Estonia: Conclusions of the Mission;

To correct for past policy slippages, the fiscal position should be strengthened over the medium term. In this context, the government's proposal to freeze the state budget wage bill for the next two years is a welcome first step and should be extended to other levels of government. The freeze would create incentives to eliminate inefficiencies in government. It would also send a strong signal for wage moderation in the private sector. More broadly, the mission welcomes the authorities' intention to review expenditure and revenue policies in the medium term budget framework with an eye to identifying savings. Priority should be given to savings that lead to a more efficient allocation of resources.

Republic of Estonia: Selected Issues- 2007

Estonia - Report on the Observance of Standards and Codes (ROSC) - accounting and auditing

Estonia - Public expenditure review update

Estonia - Living standards during the transition : a poverty assessment

Public Procurement Policy

Estonia - Public expenditure review

Budgeting in Russia

Russian Budget Calender;



For Discussion: How can Russian Budget Calender be improved?