Transcript Medium Term Budgeting Ilonda Stepanova Director Budget Department Ministry of Finance April 8, 2008 Overall planning process (advisable model) Policy planning process Medium term budget planning process Ministries' Strategic planning process Performance Budgeting.

Medium Term Budgeting
Ilonda Stepanova
Director
Budget Department
Ministry of Finance
April 8, 2008
Overall planning process
(advisable model)
Policy planning
process
Medium term budget
planning process
Ministries'
Strategic planning
process
Performance
Budgeting
2
MTEF Principles (1)
• Concept of Strategic Planning and Medium-Term Budget Planning in
the State Administration of the Republic of Latvia (the Concept) was
prepared by a working group with the assistance of the World Bank and
was adopted by the Cabinet of Ministers on August 22, 2006. The
Concept foresees:
– Adopting the Law on Budget for 1 year period
• On the level of programs and sub-programs in accordance with
the economic categories
– Adopting the expenditure framework in Saeima (the Parliament) for
the next 2 years
• On the level of ministries and other central government
institutions
MTEF Principles (2)
• Setting expenditure ceilings for 3 years for ministries and other
central government institutions;
• Introducing appropriation reserve;
• Foreseeing flexibility in redistribution of expenditure;
• Introducing process of centralized review and ranking of New
Policy Initiatives;
• Establishing closer link between strategic planning and budget
preparation process (all ministries have fully elaborated
strategic plans since 2007).
Budget planning process
(as from 2007)
1) MoF and StCh
prepares normative
act on medium term
budget goals and
priority development
directions for the
next 3 years
(by February 28)
2) MT budget
priorities accepted
by the Government
(early March)
3) New Policy
Initiatives (NPI) of
ministries submitted
for evaluation
(end of February)
4) Budget basis
expenditures agreed
between MoF and lineministries
6) Evaluation of the NPI
by MoF, StCh and
MoRDaLG
(early April)
(end of March)
11) Next year’s annual
budget and
explanation submitted
to the Government
(early May)
(by September 1)
10) Detailed
budget requests
prepared by
ministries
12) Next year’s annual
budget and
explanation submitted
to the Parliament
(by July 1)
(by October 1)
7) Prioritized intersectoral list of NPI
created
(early April)
(end of March)
5) Development part of
the budget calculated
by the MoF
9) MTEF sent to
the Parliament
for information
8) MTEF adopted by the
Government including
the list of the NPI that
will be financed during
the next years
(by April 15)
Financial Balance of the General
Government Consolidated Budget,
% of GDP
2004
2005
2006
2007
2008 plan
2009 plan
2010 plan
0.2%
1.5%
0.2%
1.0%
0.1%
1.2%
0.7%
0.1%
0.0%
-0.1%
-0.5%
-0.1%
-1.0%
-0.2%
-1.1%
6
Novelties Foreseen in the
MTEF Process (1)
• Appropriation reserve
– Until year 2007 unspent budgetary resources from the
endowment from general revenue at the end of the year were
used for reduction of the deficit and it was not possible to
transfer them for use in the next year;
– The new MTEF process foresees setting an appropriation
reserve that can be divided by the Cabinet of Ministers for:
• Completion of procurement
• Completion of investment projects
• Other well substantiated issues
– Appropriation reserve can be used only if there are no other
means of solving the existing situation
Novelties Foreseen in the
MTEF Process (2)
• Flexibility in redistribution of expenditure
– Until year 2007 Cabinet of Ministers could redistribute
expenditure among programs, sub-programs, and ECC
without amending the budget only if it was necessary for
implementation of projects co-financed by the EU
– The new MTEF process foresees the possibility that
Cabinet of Ministers can redistribute expenditure among
programs, sub-programs, and ECC without amending the
budget.
Novelties Foreseen in the
MTEF Process (3)
• Usage of institutions’ performance criteria
– The institution action strategies will include analysis
of the past performance that will be based on specific
criteria as well as proposals on defining of criteria for
further activity, so as to ensure financing of priority
activities
– Revised methodology on preparation of performance
evaluation criteria and analysis has been elaborated
and will soon be considered by Cabinet of Ministers.
The Ministry of Finance
web page:
http://www.fm.gov.lv