Medium Term Expenditure Framework (MTEF) in

Bangladesh

ARFIN ARA BEGUMJOINT SECRETARY(Budget)

FINANCE DIVISIONMinistry of Finance

Bangladesh

In Bangladesh, the MTEF was introduced in 4 ministries including Ministry of Education from 2005-06, named as MTBFThe Medium Term Budgetary Framework (MTBF) is a new budgeting approach generally known as the Medium Term Expenditure Framework (MTEF)'. Here, no basic difference between MTEF and MTBF has been stated.Only the MTBF includes expenditure and Revenue (Receipt) also.

A complete roll out of the MTBF was achieved across all 59 ministries, divisions and constitutional bodies at the end of FY12. Budget documentation has improved with Bangladesh’s Ministry Budget Frameworks (MBFs) which contain strategic objectives, outcome targets and key performance indicators (KPIs). Bangladesh has developed the MTBF following a successful and still evolving Medium Term Macroeconomic Framework (MTMF).

Institutional changes have been initiated to make sure the MTBF has a real impact on the way line ministries conduct their business during budget preparation. Budget Management Committees (BMCs), Budget Working Groups (BWGs) and Budget Management Branches (BMBs) are now operational in all line ministries. The capacity of line ministry budget officials has also been significantly enhanced in MBF preparation.since the introduction of the MTBF, line ministries have a better ability to plan their expenditures. Finance Division’s capacity to guide and support line ministries in the budget process has also improved.

• Multi-year approach covering a period of 5 years

• Includes estimated budget for the ensuing financial year and the projections for four further years

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Year 5Year 4Year 3

Year 4Year 3Year 2

Year 3Year 2Year 1

Year 2Year 1

Year 1

Budget

Budget

Budget

Year-1 MTBF

Year-2 MTBF

Year-3 MTBF

Forward Estimates

Forward Estimates

Forward Estimates

Budget Year

Annual Roll Forward of the MTBF

Annual Roll Forward

Annual Roll Forward

Year 6Year 5Year 4

Year 7Year 6Year 5

Provisions made in the Public Moneys and Budget Management Act 2009 The Finance Minister shall place the annual budget before Parliament prior to each financial yearThe Finance Minister shall submit a Medium Term Budget along with the annual budget before Parliament

MTBF : Legal Basis

Each year line ministries  develop/update their Budget FrameworkMinistry Budget Framework (MBF) is divided into two major Parts and five SectionsPart‐A is prepared by the Ministry or DivisionPart‐B  is prepared by Departments/ Agencies under the respective Ministry/Division 

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MBF-Part A(to be prepared by Ministry/Division)

MBF-Part B(to be prepared by Department/Agency)

Section-1: Mission Statement and Major Functions of the Ministry / Division

Section-2: Medium Term Strategic Objectives and Key Activities

Section-3: Poverty and Gender reporting

Section-4: Priority Spending Areas / Programmes

Section-5: Key Performance Indicators (KPI) of the Ministry / Division

Form-1: Preliminary Revenue Estimates and ProjectionsForm-2: Expenditure Ceilings for Departments and Agencies

Section-6.1: Recent achievements of the Departments/Agencies under the Ministry

Section-6.2: Activities, Output Indicators and Targets

Section-6.3: Medium Term Expenditure Estimates by Operational Unit, Programmes and Projects of the Department/Agency

Form-3: Preliminary Expenditure Estimates and Projections for five years for the Departments/Agencies under the Ministry.

Line ministries are requested to prepare estimates for the budget year and projections for the four outer yearsDepartments/agencies under the ministry prepare the estimates/ projections following the guidelines by Finance Division.Estimates and projections prepared by the departments/ agencies are examined by the Budget Working Group (BWG)  and must be approved by the Budget Management Committee (BMC) After approval of the BMC  budget estimates and projections are sent to Finance Division and Planning Commission

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On receiving the MBFs from the line ministries, Finance Division and Planning Commission examine them and identify areas to be further improvedLine ministries make necessary changes/ improvements according to the feedback received from FD and PCFD holds tripartite meetings between LMs, FD and PC to reach agreement on the proposed MBF. MBF is considered as the main basis for determining the indicative expenditure ceiling and revenue target for the respective Ministry.

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Finance Division compiles budget estimates and projections and submit them for the approval of the CabinetAfter approval of the Cabinet, the MTBF is placed before Parliament for approval of the first year’s estimates. Indicative estimates/projections for outer years are submitted to Parliament for information.

Approval of budget

The MTEF is now at its earlier stage in Bangladesh and systematic reviews of on-going spending programs are practically non-existent.need to generate better conceptual understanding, interest, demand, and ultimately ownership of the MTBF process in line ministries, large inefficiencies in the selection and implementation of development projects.

Frequent change of budget and planning skilled staff.a coordination gap and institutional differences between the Ministry of Finance and the Planning CommissionSufficient information is not available and current and reliable data are also unobtainable. So, there is much reliance on government budgetary documents that cannot always be testified by evidences from other sources.monitoring and evaluation systems yet to develop strong.

ownership and engagement of line ministries should be facilitated through high-level workshops with an open discussion of MTBF implementation and concerns. Involving Planning Commission to ◦ the budget process from very beginning◦ the line ministry budget ceilings, ◦ continuous dialogue across the two ministries through budget

reform working groups. Monitoring and Evaluation mechanism should be introduced strongly.

Thank youwww.mof.gov.bd

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