The Medium-Term Expenditure Framework (MTEF) is considered appropriate in developing countries because there is
fragile linkage between the budgeting system and planning. The MTEF is one of the aspects of the Public Financial
Management, which incorporates planning into budgeting over the medium term. It should guide annual budgets, as it is
argued that it links policy, plans and budgets over a medium-term period of three to five years. The MTEF should enable
organisations envision the effects of policies over several years and support effective resource allocation. Its rationale is to
enable organisations to incorporate future fiscal challenges into their annual budgets more adequately, thereby reducing
undue emphasis on short-term goals. It should encourage ongoing reallocation and broaden the budgeting scope.
The MTEF is meant to achieve a balanced budget, shift resources to pro-poor activities and further the practices of good
governance. Western donors, such as the International Monetary Fund (IMF) and the World Bank, have actively promoted
MTEF reform in developing countries by making their contributions conditional on its adoption and implementation.
Despite being considered an aspect of effective budgetary management, it has been reported to be complex and
challenging, even in developed countries. Public financial management experts criticise the MTEF and its implementation
with the experts questioning MTEF effectiveness and reliability in guiding annual budget processes. The experts also argue
that the MTEF conflicts with annual budgeting as it may distract actors from basic budgeting problems in annual budgeting
and they also note that little attention has been paid to demonstrate how such conflicts occurs and how organisational actors
respond to such conflicting demands. Although the MTEF is argued to be complex, some Public Financial Management
experts argue that it is the contextual environment of the developing countries which constrains MTEF success.
Required:
(a) Analyse FIVE strategies that developing countries should adopt to minimise conflict between the Medium-Term
Expenditure Framework (MTEF) and annual budgeting.
(b) Evaluate FIVE contextual factors that constrain the success of MTEF in your country.
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