This is one of a series of recent World Bank publications on public finance issues written to provide conceptual guidance and practical lessons on how to encourage more responsive and accountable government.  It takes the form of a primer on budget institutions and their different functions, exploring issues such as coverage of the budget, capital budgets, moving beyond incremental budgeting, performance budgeting and many other topics.

This comparative study on MTEFs in Botswana, Tanzania, Zambia, Kenya and Namibia found that all countries had made some progress towards implementing the MTEF principles, and had seen benefits in terms of improved pro-poor budgetary allocations and increased consultation around the budget.  However, none of the countries has been able to implement a complete MTEF, and budget allocations continue to be unreliable due to poor forecasts, weak enforcement of budget ceilings and low political commitment.

With the failure to link policy, planning and budgeting widely assessed as the most important cause of poor budget outcomes in developing countries, MTEFs have been widely considered a panacea not just for strengthening budget systems but strengthen the broader performance of government.  However, this article questions whether such a sophisticated mechanism is really the best place to start in reforming budget systems.  Few MTEFs in developing countries work effectively, and even in OECD countries stringent conditions have to be met.  More narrowly focused budget frameworks, or even just a focus on basic budget reforms, may be more appropriate in some country contexts.

This study, based on five case studies (Bolivia, Burkina Faso, Cambodia, Tanzania and Vietnam) is one of the most detailed and technical assessments available of the challenges of linking PRSPs to the budget. It analyses problems such as weak budget classification, which prevents agencies from matching their spending to PRS priorities, poor reporting on budget execution, and the difficulties of monitoring the impact of expenditure on poverty reduction.  It notes that, where governments lack the capacity to execute budgets as planned, there is little chance of holding them to account for development results.

This ODI Briefing Paper discusses the potential of MTEFs to link the competing imperatives of macroeconomic stabilisation with medium-term spending priorities, in order to budget resources more strategically.  It discusses the importance of an integrated budget cycle, close attention to fiscal stability and early engagement with the political decision-making process.  It notes that successful MTEFs begins with a strategic phase which determines sectoral budget ceilings, followed by the preparation of detailed budget estimates within these ceilings.

This World Bank study is based on 9 country case studies carried out in 2006.  It offers practical insights on how to strengthen PRS and budget linkages to support accountability.  It discusses the potential to design institutional arrangements around the budget so as to increase scrutiny of resource allocation, budget execution and outcomes, in order to strengthen performance incentives.  Attempts to reinforce PRSP/budget linkages typically include measures to enforce pro-poor spending priorities, the introduction of MTEFs and results-oriented programme budgeting.  It discusses a range of practical challenges arising from the case studies, and present options for addressing them.

This World Bank guidance note provides practical advice and useful tools in four areas: (i) identifying gaps in the policy, planning and budgeting cycle; (ii) introducing a strategic phase and medium-term perspective to the budget process; (iii) introducing a performance orientation to the budget; (iv) aligning PRS and budget reporting with decision making processes.

This review by the Overseas Development Institute (ODI) concluded that the PRSP has begun to escape from its origins in HIPC and IFI conditionality, and become genuinely country owned. It found that second-generation strategies were more comprehensive and multi-sectoral, and have triggered a genuine shift in expenditure towards poverty reduction in health, education and transport. They had opened up the policy process and enabled civil society to engage in policy debates “on an unprecedented scale.” However, it also noted the tendency of PRSP units to act as “enclaves” within government, and for ownership to be limited to core central ministries. The lack of budget links had resulted in poor costing and prioritisation, while weaknesses in public-financial management systems made the strategies difficult to implement. While donors were making genuine efforts to align with PRSPs, it found that this was often a pro forma process of reformulating existing policies in PRSP language. It found that too much assistance was still provided off the budget, and was fragmented across too many sectors, programmes and projects.

This is an internal review of the PRSP approach carried out jointly by World bank and IMF staff.  It is a broadly positive assessment, suggesting that PRSPs have brought about a “fundamental change” in the relationship between low-income countries and donors.  It found that while most PRSPs contained good qualitative and quantitative analysis of poverty, it was often hard to link that analysis to the policies selected.  Few countries had linked their PRSPs to the budgets through an MTEF.  The process had created space for broader participation in the policy process, but there had been little public discussion of macroeconomic policy choices.  Staff suggested a number of priorities for strengthening the PRSP approach, including strengthening the medium-term perspective, participation and budget linkages.