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.

Rebirth of Economic Reason ...

I have been been delighted with the sudden introduction of reasoning in our approach to economic matters of the country. For once we look at issues in the media and hear people talk using the best possible aspect of reason and economic understanding as possible. Talk is now based on issues and not tissues!

Look at how the issues of Zamtel, Debasing or the Kwacha, Corruption fight. We have as a country looked at these issues professionally and people who didn't know about them, have been educated. That's how we should handle matters that we face each day.

I hate the political talk that was all over Facebook with no logic on the matters at hand but behaving like total cadres. I think we could have done better with economic issues. We could have addressed the issues of weak tax revenues. Lack of employment and what can be done by those in authority to bring down the unemployment rate. Inflation rate (or has that now been pushed to the day we change to the debased currency?).

Infrastructure Development

What do we need to work on? I hate going to the airport which looks like its not the biggest airport in the country. Shouldn't we be thinking about building or upgrading our airports? Why not 3 terminals - at the least!

We badly need roads and this will boast our production and exports. Which roads should be first and why? We all know its expensive to maintain roads, so why not introduce toll-gates on roads to be constructed. Would actually encourage private sector to be involved in infrastructure development, especially when we eliminate the "public-ness" of some infrastructure like roads through introduction of toll chargers which will handle the issue of excludability even if there is still a non-rivalry element - all things equal of course :)!

Budgeting??

How come we have supplementary budgets all the time? Is it a failure to plan the budget? Are things being included with no budget line all the time? What has the constitution said about all this? Where are the laws and rules related to budgeting? I have not heard a soul talk about that. And I believe even the parliament over-sight on monies of the country should be strengthened further! Have we forgotten how money was used to construct and maintain roads which parliament was not told about? Is it such a short time that these issues have disappeared? We need a check on political hand in cash of the country, let them be involved in political direction. I really need to hear this as it will help our Kwacha economics in its movement and being!

Kwacha Backed

I know this issue is a thorn to some people but we need to address the kwacha. Not the political aspects as I never wish to divert to politics on this blog! But the economics of the kwacha. I believe this is the only thing that is important - to me anyway! If we work on making our Kwacha economics better, we will focus our attention on demand stimulating of kwacha backed goods (my attempt at making Zambian production a kwacha issue). The country will aim at being better in production, consumption of kwacha backed goods, getting a fair share of the mineral worth, etc. This is a way of addressing the weaknesses in our approach to economic issues and will make sure we put in place policies, infrastructure, rules and ideas to work for and produce kwacha backed goods! Proudly Zambia - that's Kwacha backing!

We need this rebirth of reason to be channelled to and focus on kwacha backed ideas, goods, services, policies, etc