What's a MTEF?

A medium-term expenditure framework (MTEF) consists of a top-down estimate of aggregate resources available for public expenditure consistent with macro-economic stability; bottom-up estimates of the cost of carrying out policies, both existing and new; and a framework that reconciles these costs with aggregate resources. It is called “medium-term” because it provides data on a prospective basis, for the budget year (n+1) and for following years (n+2 and n+3). MTEF is a rolling process repeated every year and aims at reducing the imbalance between what is affordable and what is demanded by line ministries. MTEF does this by bringing together policy-making, planning, and budgeting early in the budgeting cycle, with adjustments taking place through policy changes. It involves building domestic macro-economic and sector modeling capacity. Also, even if the whole of the Government’s budgeting system is not working well, each sector is better off managing itself with a medium-term perspective. A well implemented MTEF should: (i) link the Government’s priorities with a budget within a sustainable spending envelope; (ii) highlight the tradeoffs between the competing objectives of the Government; (iii) links budgets with the policy choices made; and (iv) improve outcomes by increasing transparency, accountability, and the predictability of funding.