Africa Region Working Paper Series No. 82

Budget institutions, practices and performance have deteriorated over the years in Sub-Saharan Africa (SSA). External assistance, which has increasing become a major part of budget financing, has contributed to the fragmentation of the budget and the distortion of budget priorities and practices. The culprit has been the conditions and procedures attached to this assistance. In recent years, the donor community has promoted the medium-term expenditure framework (MTEF) as the approach to improve the budget practices and outcomes in SSA countries. Some countries have already adopted the MTEF but so far, the evidence on performance on implementation has been mixed. This paper takes as a point of departure that the MTEF is a conceptually sound approach for improving public expenditure management (PEM). It therefore aims to contribute to the debate on the challenges to introducing and implementing the MTEF in SSA countries, drawing extensively from the experience of Rwanda, where the implementation of the MTEF was the subject of a recent analytical review.

The paper focuses on one key aspect of the MTEF – the integration of the budgets. A meaningful MTEF would have to be in the context of an integrated budget, involving an end to practices that fragment the budget. Consequently, the MTEF would require the sustained commitment of both the government and its development partners to institutional change, capacity building, and effective partnership between the government and its donors. A key element of the institutional change would be the harmonization of donor assistance procedures with the budget procedures of the government, and the alignment of donor assistance to the MTEF and the budget process. While the implementation of the MTEF would represent a considerable challenge in many countries, the paper proposes that, even in the difficult cases, the MTEF be adopted as the conceptual framework for PEM reform, with selective and phased implementation of MTEF techniques. In parallel, there should be efforts to sensitize the government and donors and build capacity on MTEF concepts, with the pace of implementation in line with developments in commitment and technical capacity.

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