2015 - 2017 MTEF (Green Paper)

Medium Term Expenditure Framework (MTEF) for the period 2015 - 2017 has been released. This is the famous Green Paper that is always talked about.

So maybe we should make sure we know what we are talking about. MTEF is government's strategic policy and expenditure framework. Ideally the MTEF balances what is affordable against policy priorities of the government within the available resources or resource envelop.

This is done with a top-down resource envelop and a bottom-up estimation of current & medium-term (in Zambia we use a 3 year period as the medium-term). All the expenditures or costs are matched with available resources for the period. It is important to note that in Zambia we use a three (3) year rolling MTEF. Simply put there is a 2014 - 2016 MTEF period which is accompanied by the 2014 budget and the next one is the 2015 - 2017 MTEF to be accompanied with the 2015 Budget. The fact that is it rolling, reviews are carried on while the other one is in motion.

The Game Plan

The "Green Paper" has the government's plans for the period through the budget. So it is important to have a look at this before you even have the 2015 Budget. This is the game plan that would be used in the period 2015 - 2017.

Government's strategic priorities are set forth in the Green Paper and you can easily deduce what the issues for the period will be. Resource allocation and the areas considered priority will determine what kind of business the government's business will be. All policy prioritization, alignment of policies and objectives under available resources. Resource mobilization will also be dependent on the type of expenditure the government will be embarking on. As some people say, you can literally arrive at what taxes will go down and what will go up. I'm yet to find that because, the resource envelope though embedded, might depend on other factors and not really the issues of priority. In the same vein though, you can see what will be taxed less if it will lead to efficiently meeting the overall objectives of the policy priorities. This is because revenue estimates (mainly taxes, non-tax, borrowing, grants, etc.) are done in line with the macroeconomic framework.

Sector Focus

Sector strategies are formulated to link budget allocations with expected policy achievements at each sectoral level. Sector focus ensures that the resources are allocated in line with the overall strategy. 

For example, if education will be the main focus, you expect a huge allocation of resources to education in the budget and over the medium-term. In some cases, there's a plan for both conservative and optimistic scenarios. This will ensure the overall plan has scenarios that suit the expected worst scenario and the best possible. I am not sure which one is given to the public in Zambia.

Baselines are also put forward to indicate whether or not policies are sustainable and are in line with the budget in medium-term.

Lastly of course the dreaded sector and Ministry, Province or Spending Agency (MPSA) ceilings. The cap to how much will be available for a particular MPSA in terms of resources within which their budgeting will have to be made. This ceiling is because of the resource constraint and a need to prioritize and only budget for strategic areas in full. You may need to note that ceilings are fixed for the medium term and each of the year in the medium term.

Zambia's 2015-2017 Medium Term Expenditure Framework

The Green Paper addresses the focus as: 

The 2015 – 2017 MTEF will build upon the favourable macroeconomic performance recorded over the last five years which was evidenced by high economic growth rates, attainment of single digit inflation and positive trade balances. The specific broad economic policy intentions include; promoting high growth in the labour intensive sectors of agriculture, tourism, manufacturing, and construction; sustaining economic growth rates of not less than 7 percent; keeping inflation low and stable; continuing to promote Zambia as an investor friendly destination and implementing structural reforms aimed at reducing the cost of doing business.

The 2015 – 2017 Medium Term Expenditure Framework (MTEF) has been formulated with the overall objective of enhancing the benefits to citizens from the positive economic growth that has been achieved over the past few years. This is in line with the spirit of the Revised Sixth National Development Plan (R-SNDP) which is “people-centerel economic growth and development”. Government will focus on ensuring that growth is inclusive and propoor so that the benefits of a stable macroeconomic environment, positive economic growth and single digit inflation bring about improved standards of living for the Zambian people. This will be done by stepping up both human effort and financial resources in areas that have a direct impact on

the improvement of individuals’ quality of life, such as education and skills development, health care, agricultural support, citizen empowerment, employment creation, provision of public infrastructure and social amenities. With these interventions the Government is confident that inroads will be made in creating jobs, raising incomes and reducing poverty.

You can download the 2015 - 2017 MTEF (Green Paper) here.