Home Tribhuvan UniversityMPA TUMPA First SemesterPublic Finance Medium-term expenditure framework (MTEF)

Medium-term expenditure framework (MTEF)

by arjan kc
0 comment 2 minutes read

The Medium-Term Expenditure Framework (MTEF) is a budgetary planning and management approach that extends beyond the traditional one-year budget cycle. It aims to enhance fiscal discipline, strategic resource allocation, and the alignment of budget decisions with policy priorities over a medium-term horizon. MTEF is used by many countries, including Nepal, to improve budget planning and execution. Here’s an overview of the MTEF:
Key Features of MTEF:
Multi-Year Perspective: MTEF covers a medium-term period, typically spanning three to five years. It provides a longer planning horizon, enabling better alignment with long-term goals and policies.
Strategic Planning: MTEF links budgeting with strategic planning, ensuring that budget decisions are consistent with the government’s overall policy objectives and priorities.
Outcome-Focused: MTEF emphasizes outcomes and results rather than just inputs and outputs. It encourages programs and projects that deliver tangible impacts.
Integrated Approach: It promotes coordination and integration across government ministries and agencies. It helps avoid siloed approaches and fosters collaboration.
Resource Envelope: MTEF establishes a clear resource envelope for the medium term, indicating the total available funding. This helps guide ministries in making realistic budget requests.
Rolling Process: MTEF is a rolling process, meaning that as one fiscal year is implemented, a new year is added to the plan. This maintains the multi-year perspective and ensures continuity.
Expenditure Ceilings: Ministries are provided with expenditure ceilings for the entire MTEF period. This encourages efficient resource allocation within those limits.
Budget Flexibility: While MTEF sets expenditure ceilings, it allows some flexibility within those ceilings to respond to changing circumstances.
Performance Measurement: MTEF emphasizes monitoring and evaluating performance over the medium term to ensure that the expected outcomes are achieved.
Benefits of MTEF:
Fiscal Discipline: MTEF enhances fiscal discipline by requiring ministries to operate within predefined expenditure limits.
Strategic Allocation: It encourages resource allocation that aligns with long-term policy goals.
Improved Planning: MTEF facilitates better planning by providing a comprehensive view of resource availability and allocation.
Reduced Uncertainty: Medium-term planning reduces uncertainty, enabling better decision-making and program implementation.
Enhanced Accountability: Focus on results improves accountability by holding ministries responsible for achieving outcomes.
Transparency: MTEF promotes transparency by making budgetary plans and priorities more visible to the public.
Effective Resource Management: It fosters efficient use of resources by prioritizing programs with higher impacts.
Investor Confidence: A well-implemented MTEF can enhance investor confidence by demonstrating responsible fiscal management.
In Nepal, the MTEF process involves setting medium-term ceilings for the budget and aligning budget proposals with policy priorities. The process requires effective coordination among ministries, departments, and agencies to ensure that budgeting decisions are coherent and strategic across the medium term. MTEF aims to bridge the gap between short-term budgeting and long-term development goals, enhancing overall fiscal management and governance.

You may also like

Leave a Comment

Adblock Detected

Please support us by disabling your AdBlocker extension from your browsers for our website.