MEDIUM TERM BUDGETARY FRAMEWORK (MTBF)

Different Systems of Government Budgeting

Traditional Line Item Budgeting Performance Budgeting Planning, Programming, Budgeting System (PPBS). Zero-Base Budgeting (ZBB) Medium Term Budgeting

Traditional Line Item Budgeting

the budget is prepared on a line item basis; the preceding years income and expenditure are accepted as the standard for the next years budget. it becomes impossible to measure the performance or activities of a department;

Traditional Line Item Budgeting

Traditional budgeting does not require policy analysis. its incremental approach fails to consider whether a particular item is still required or the amount currently incurred is reasonable. Once an item appears in the budget its inclusion in future budget is taken for granted and only incremental changes in the item are considered.

Performance Budgeting

Traditional budgeting does not relate inputs or costs with outputs and performance. Performance budgeting emphasizes outputs and performance rather than inputs; Output is measured in terms of the amount of goods and services produced, the number of cases handled, the number of persons affected. Efficiency is usually measured in terms of cost per unit.

Planning, Programming, Budgeting System (PPBS

Also known as program budgeting; Like performance budgeting, PPBS emphasizes outputs; PPBS creates scope for selection of the most efficient alternative and enable the decision-makers to allocate resources on the basis of benefit/cost relationships.

Zero-Base Budgeting (ZBB)

Zero-base budgeting means preparation of budget from a zero base. The concerned organization might be an old or a new one, it is assumed that it is starting as a new organization. Previous patterns of expenditures are not taken as the basis and each existing item of expenditure has to be annually re-justified;

Medium Term Budgeting

A new Budgeting approach generally known as Medium Term Expenditure Framework (MTEF). A Whole-of-government strategic policy expenditure framework within which ministers and line ministries are provided with grater responsibility for resource allocation decisions and resource use. to balance what is affordable in aggregate against the policy priorities of the country. consists of a top-down resource envelop, a bottom-up estimation of the current and medium-term cost of existing policies and matching of these cost with available resources.

MTEF: the Basics

Rational approach covering 3-5 years Covers both expenditure and income Covers both capital and recurrent Less detailed than budget Sets resource envelopes for each sector/ministry through medium-term Budget should be first year of MTEF Rolling approach updated annually Plans for year 2 onwards dont have same legal force as budget

WHAT IS BUDGET (MTBF)

A Budget is--- ---a set of resources applied to achive a specific objective--- .

---It is an action plan not just a funding plan.

What is Government Budgeting?

A government budget is a statement of a governments estimated receipts and expenditure for a particular period, normally a year. The budget brings all the governments tax and spending plans together. Financial reflection of government activities or what the government plans to do.

MTBF THE MAIN FEATURES

A MEDIUM TERM OUTLOOK TO BUDGET PLANNING 3 YEARS. LINKING POLICY PRIORITIES TO RESOURCE ALLOCATIONS NSAPR TO BUDGET.

EMPHASIZING THE EFFICIENT USE OF LIMITED PUBLIC RESOURCES.

THE OBJECTIVES OF MTBF

OPERATIONALISING THE NSAPR

(ALSO TO FULLFIL THE TARGETS OF MDG).

ENHANCING LINE MINISTRIES CAPACITY TO FORMULATE POLICY AND PROGRAMMES.

PERFORMANCE MEASUREMENT.

MTBF APPROACH
BB Macro
economic forcasting PRIORITIES

NSAPR/
National Policy document

RESOURCES

ACTIVITIES

OUTPUTS

OUTCOMES

Ministry Objectives

MTBF- STRATEGIC PHASE

PROVIDE A DIRECTION FOR THE MINISTRY.

INJECT A SENSE OF PURPOSE INTO THE MINISTRIES ACTIVITIES. DECIDE WHO WE ARE, WHAT WE DO, AND WHERE WE ARE GOING. PROVIDE A THREE YEAR PROJECTION OF TOTAL AGGRIGATE BUDGET ALLOCATION DEVELOP AND NON-DEVELOPENT

MTBF IMPLEMENTATION & MONITORING

Once the budget has been set the Ministry has an obligation to turn it into action. One key element of this is to compare actual performance against what was expected. This requires the regular production of performance reports for discussion at management level. Periodic Reports :

ADP monthly review CGA /CAO monthly financial information Departmental performance information

Annual Reports :

Ministry wide Accounting Entry wide Audit

MTBF:IMPLEMENTATION & MONITORING

NSAPR/National Policy Document Ministry Oblectives

RESOURCES

ACTIVITIES

OUTPUTS

OUTCOMES

PERFORMANCE MEASUREMENT

ECONOMY

EFFICIENCY

EFFECTIVENESS

DIFFERENCE BETWEEN MTBF & TRADITIONAL BUDGET

The MTBF integrates both recurrent and investment expenditure rather than the two traditional budgets of development and non-development. Traditionally a budget has been formulated for 1 year. The MTBF introduces a multi-year timehorizon for budget planning. In Bangladesh that is 3 years.

MTBF budget together the policy planning and budgeting processes. Resource allocation is linked to the policies and priorities of the Ministry. The traditional budget approach is incremental i.e. a percentage added to last years allocation. The traditional budget focuses on inputs only. Under the Medium term budget the output and outcome expected from the budget allocation is considered.
Under MTBF line Ministries are given enhanced authority to allocate funds according to their specific needs.

MTBF LINE MINISTRIES

YEAR-1(1905-1906) 4 PILOT MINISTRIES

MINISTRY OF EDUCATION.
MINISTRY OF SOCIAL WELFARE. MINISTRY OF WOMEN & CHILDREN`S AFFAIRS. MINISTRY OF AGRICULTURE.

MTBF LINE MINISTRIES

YEAR-2 (1906-1907) 6 ADDITIONAL MINISTRIES

MINISTRY OF PRIMARY & EDUCATION. MINISTRY OF HEALTH & FAMILY WELFARE. LOCAL GOVERNMENT DIVISION. MINISTRY OF FISHERIES & LIVESTOCK. MINISTRY OF WATER RESOURCES.
MINISTRY OF COMMUNICATION

MTBF LINE MINISTRIES

YEAR-3 (1907-1908) 4 ADDITIONAL MINISTRIES

MINISTRY OF SCIENCE AND ICT.

RURAL DEVELOPMENT & COOPERATIVES DIVISION.

MINISTRY OF ENVIRONMENT & FOREST. MINISTRY OF FOOD & DISASTER MANAGEMENT.

MTBF LINE MINISTRIES

YEAR-4 (1908-1909) 2 ADDITIONAL MINISTRIES

MINISTRY OF SHIPPING.

MINISTRY OF LAND.