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financial resources to carry out its economic, social, political and environmental
functions.
Approaches to developing a sector MTEF vary. The process is usually
coordinated by the finance/planning department but requires significant inputs from
line departments. As with the usual annual budget cycle it generally involves a
combination of ‘top down’ approaches – with the finance department setting agreed
expenditure ceilings consistent with macroeconomic stability – and ‘bottom up’ ones
in which line departments cost what they need and try to justify why they should get
a greater share of the available cake. The final outcome is arrived at through a
process of iteration. For the purposes of an MTEF it is not necessary to cost every
line item required for every sub component of every activity of every programme.
This would be unwieldy and of little use to policy makers. If the MTEF relates to all
sectors and forms the basis of broad structural adjustment
type support one might
expect health just to be covered as one item (although primary health care might be
separated out). If the MTEF is supporting the development of sector support one
would expect much greater detail. The basis would have to be agreed at the country
level. Options might include using broad budget heads e.g. medical education and
training or other approaches such as primary, secondary and tertiary care. Detailed
line budgeting need only be included in the annual budgets, which would need to be
consistent with the MTEF.
In short, the annual budget contains the detail for the coming year; the MTEF
shows broad directions for a longer period with the
degree of detail determined
through discussions between key stakeholders (notably finance/planning, the line
department and donors). This places greater onus on line departments to cost the
services or functions they are responsible for. In practice, the financing of health
services is extremely fragmented and there is little data on the unit costs of providing
services. At the outset resources may be allocated in a very skewed way, with a heavy
emphasis on salary costs and on tertiary hospitals. It may be sufficient to include a
scenario which starts shifting resources in the right direction, such as more non-salary
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costs, especially maintenance, and primary health care especially immunization. At
later stages it should be possible to introduce more
sophisticated or fine tuned
approaches for service standards (including staffing requirements by type of facility),
costing these and aggregating them. In simple terms at the outset the aim might be to
move in the right direction without necessarily knowing what the destination should
be – the destination is determined during the process.
A number of factors make it difficult for low income countries to implement
MTEFs.
Macroeconomic instability – rapid inflation can render forward planning
impossible.
Lack of quality (and timely) financial information – data on donor flows is
generally poor which is a major problem in aid dependent countries. In countries with
multiple funding channels accurate data is difficult to obtain. National Health
Accounts (or simpler rapid resource mapping approaches) can help address this.
Weak financial systems – systems may not be in place to inform budget
holders on whether budget ceilings are being adhered to.
Capacity and institutional weaknesses – there may be weaknesses within
line ministries to develop and present priority programmes effectively. Ministry of
finance staff
may also lack the capacity, or objectivity, to approve the most cost
effective programmes.
Lack of budgetary discipline – budgets are not treated seriously with a
large number of supplementary allocations made during the year.
Overambition – ministries of health, like many other ministries, often
attempt to achieve too much with too little, spreading
their resources too thinly
resulting in poor performance across the board. Realistic costings may mean that it is
not possible to provide adequate financing even for existing services. Yet there are
major incentives to develop new programmes – in part because many donors are
willing to fund capital and not recurrent costs.
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Lack of realism – projections are often made on the basis of overestimates
of revenue sources. Given this wide range of challenges, in some situations more
limited approaches might be more appropriate. The constraints may need to be
addressed before a full scale MTEF can be implemented.
Analyzing the foundations of the budget process in the Republic of Uzbekistan,
regulatory and legal basis and stages, as well as the study
of the existing budget
system, the structure of the State budget and its forecasting methods, showed that
there
are some shortcomings that limit the possibilities of consistent and effective use of
budget funds in the practice of budget planning.
Estimated planning practically avoids the problem of determining the results of
financing. In other words, costs themselves act as results. Budget planning is limited
to one year, and it does not provide an opportunity to direct the budget policy to
achieve priority tasks and goals of socio-economic development that deviate from the
scope of the current year. As a result, the national and
sectoral programs that are
adopted with a view to implementation in the medium and long-term future are often
not linked to budget possibilities.
