MTEF Reform in Bangladesh Analysis

MTEF Reform in Bangladesh Analysis Chapter 1: Introduction 1.1 Background This dissertation studies the MTEF (Medium Term Expenditure Framework) reform in Bangladesh. The MTEF was introduced in 4 ministries including Ministry of Education from 2005-06, named as MTBF (Medium Term Budgetary Framework). In the following year it included Ministry of Primary and Mass Education and Ministry of Health and Family Welfare. All other ministries will be brought under this framework in near future. The focus of this study is to explore the effect of introducing the MTEF in education and health budgets, explain the difference between the MTEF and traditional budgetary system in the formulation and execution of budget, analyze the effectiveness and efficiency of budgetary spending due to adopting the MTEF in the education and health sectors considering the three outcomes (maintaining fiscal discipline, promoting allocative Efficiency and enhancing operational efficiency) of public expenditure management (PEM) and finally to comment on whether improvements were achieved or not due to adopting the MTEF. This chapter outlines the relevancy of the study, the research questions to be answered in the subsequent chapters, methodology and analytical framework, limitations of the study and finally the presentation structure. 1.2 Rationale of the Study The main objective of formulating a budget under the MTEF is to link the budgetary allocations with governments policies, priorities. This is for ensuring efficient utilisation of limited public resources, which will enhance pro-poor growth and poverty reduction. One of the ‘policy priority triangles set out in countrys Poverty Reduction Strategy Paper (PRSP, 2005) is human development. So, Education and health sectors have been attached to top priority on investment by the Government. 1 According to MTBF (2005-06, p-01), ‘The Medium Term Budgetary Framework (MTBF) is a new budgeting approach generally known as the Medium Term Expenditure Framework (MTEF). Here, no basic difference between MTEF and MTBF has been stated. So, the term ‘MTEF will be used ubiquitously in this dissertation except quoting the references where relevant. These two sectors account for almost 20% of the total government expenditure each year in Bangladesh. The MTEF has been implemented in these two sectors since 2006 and many of the government policy objectives are linked with them. It is necessary to review the performance of the MTEF so that the output could be infused into ongoing works and corrective actions can be taken to planned activities accordingly. Thus, it seeks to investigate the impact of the MTEF on budgetary system of these two sectors. 1.3 Research Questions For this paper, the research questions are: 1. To what extent MTEF led to changesa in the formulation and execution of education and health budgets? 2. Has MTEF improved the effectivenessb and efficiencyc of budgetary expenditure on education and health? a. Mainly three types of changes- institutional, process (procedure) and technical (technological). b. Effectiveness is about how far does the activity (here MTEF) achieve its objective- and the objective itself is greater allocative efficiency. c. Efficiency here means at what cost was that result achieved, i.e. how many additional resources were used up in adopting MTEF (Here it means operational efficiency). 1.4 Broad Methodological Approach The analysis is purely desk- based. Secondary information sourced from review of literatures on the MTEF of different countries and other related articles of OECD, IMF, World Bank. UNICEF, PEFA, ADB, UNDP comprising as assessment and analysis of available documents on the MTEF and related processes. To answer the research questions data of national budget from 2001t o 2010, documents on the MTEF from 2006 to 2010, monthly fiscal report from 2004 to 2008- Finance Division, Ministry of Finance (MoF), Bangladesh Economic Review 2003-2008, IRBD by CPD (Centre for Policy Dialogue) from 2004- 2010, Public Expenditure Review on health- 2007, Bangladesh Bureau of Statistics, Sector wise budgets from Ministry of Education, Ministry of Primary and Mass Education, Ministry of Health and Family Welfare are used. Data from national budgets, BER, MTBF and PER played the key role to answer the research questions. Information was collected from interviewing few relevant staff of the MoF and consulti ng published documents and databases available in the Internet. The analysis is both qualitative and quantitative depending on the availability of the relevant data. 1.4.1 Analytical Framework 1) To answer the first question regarding changes due to adopting MTEF in Bangladesh, three elements will be analyzed institutional change, procedural change and technical change and this analysis will try to differentiate the qualitative changes took place due to adopting MTEF over the traditional budgeting system in relation to those three elements. 2) The MTEF budgets of education and health will be assessed taking into account the three basic elements of PEM (Public Expenditure Management) maintaining fiscal discipline, promoting allocative efficiency and enhancing operational efficiency (Schick, A, 1998) to get the answer of the second question concerning improvement in effectiveness and efficiency of budgetary spending after MTEF. Fiscal discipline, allocative efficiency and operational efficiency are interdependent (DFID, 2001). Allen Schick (1998, p. 2) argued that the lack of fiscal discipline leads to improper resource allocation and operates inefficiency. So, fiscal discipline promotes allocative and operational efficiency. MTEF sought to strengthen those three outcomes. Therefore, the effectiveness and efficiency of budgetary spending is improved when those three basic elements are achieved. The following criteria/ principles will be analysed to reveal the experiences of attaining those three basic elements Source: The above criteria in the table are generated on the basis of the literature of Schick, A (1998), World Bank (1998), DFID guidelines (2001) 1.4.1.1 Criteria setting The aim is to find out some criteria that influences the three objectives of PEM as well as matches with the ‘MTEF objectives of Bangladesh (discussed in chapter- 3..) so that the impact of the MTEF can be assessed. The analytical framework is adapted and it is mainly based on the literature of ‘Schick, A (1998), A Contemporary Approach to Public Expenditure Management, ‘World Bank (1998), Public Expenditure Management Handbook, DFID guidelines (2001) and some other empirical evidences (discussed in chapter- 2). Some other relevant criteria are not examined mainly due to data non- availability of appropriate data. For example, improvement in accountability and transparency relates to operational efficiency is not analysed due to data limitation and relevant information unavailability. A simple cross- section data is presented in tabular form where it is relevant in addressing the research questions. 1.6 Limitations The MTEF is now at its earlier stage in Bangladesh and no formal review or comprehensive assessment has been made on this new budgetary process. Sufficient information is not available and current and reliable data are also unobtainable. So, there is much reliance on government budgetary documents that cannot always be testified by evidences from other sources. 1.7 Presentation Structure Chapter 2 provides literature review on theoretical concept of MTEF, budgetary reforms followed both in developed and developing countries and assessments of the impact of the MTEF in those countries using the analytical framework specified for answering question two. Chapter 3 illustrates MTEF reform in Bangladesh and analysis of the traditional budgetary process and MTEF in view of the changes took place due to adopting MTEF to get the answer of question 1. Chapter 4 focuses on the assessment of impact of MTEF on education budget to get the answer to question-2 Chapter 5 focuses on the assessment of impact of MTEF on health budget to get the answer to question-2 Chapter 6 presents the conclusion where all the research questions are summarized. Chapter 2: Literature Review This chapter aims to explore various criteria/ principles that will be used to judge the performance of the MTEF in line with the three basic indicators of the public expenditure management (PEM). With this end in view, it provides literature review on theoretical concept of the MTEF, the theoretical explanation regarding the relationship between the MTEF and the public expenditure management (PEM). It also examines the empirical studies on the MTEF of different countries to reveal the different criteria/ conditions that were set to assess the role of the MTEF in promoting the efficiency and effectiveness of public expenditure. Finally it brings together some criteria that will be used to develop the analytical framework to assess the impact of the MTEF on education and health budget (the title of the dissertation) in Bangladesh. 2.1 The Theoretical Background 2.1.1 Concept of the MTEF The MTEF (Medium Term Expenditure Framework) is defined as an approach ‘designed specially to link planning, which has a medium term outlook, with the annual budget, and, as a consequence, to link budgetary expenditure more systematically with socially desired outcomes, (ADB, 2002, p-1). On the whole, MTEF integrated policy, planning and budgeting and allows expenditure to be ‘driven by policy priorities and disciplined by budget realities (World Bank, 1998). So, MTEF is a multiyear rolling expenditure under which a realistic projection of revenue receipts and expenditure is prepared over a three to five year period and spending priorities are set with reference to the Governments policy objectives and thus it provides a clear foundation for the annual budget. Under the MTEF, over a three year period, first year estimate is considered as budget, two outer years estimates as indicative figures. In the following year, the MTEF rolls forward and a new forward estimate for an other year is added. After necessary adjustment, the second year forward estimate is considered as budget as it becomes first year for the next MTEF. Figure 2.1: Rolling Principle of the MTEF (Source: ODI, 2002, p- 5) In many countries, the MTEF is implemented at two key levels, at the central government level which is referred to as the ‘top- down approach and at the spending agencies level, referred to as the ‘bottom- up approach (World Bank, 1998, p-40). In the ‘top- down approach, Ministry of Finance identified the ‘resource envelops (which is referred to as the indicative expenditure ceiling) and allocate those to the line ministries in view of their relative need. In the ‘bottom- up approach, line ministries or sectoral agencies formulates and estimates the actual and projected costs of the spending programmes within the spending limit for the medium term by examining the sectoral objectives and activities (Houerou and Taliercio, 2002, p-2). Table 2.1 Seven Stages of the MTEF Source: Adapted;[PEM Handbook (World Bank, 1998a: 47-51) cited in N.Oyugi. L, (2008, p-3, 4) and Houerou and Taliercio, (2002, p-3)] Annexure- 2 2.2 A General Overview of the Empirical Literature Many developed countries like UK, Australia, New Zealand, Austria, Sweden, Germany, USA are practising multi- year budgeting. The MTEF of UK maintains a firm consistency in controlling public expenditure having ‘focused on outcomes and efficient service delivery (HM Treasury, 2007). World Bank, DFID and other Aid agencies influenced many developing and transitional countries to initiate series of reforms (Wyane, 2005). The MTEF is introduced in more than 25 countries in Asia, Africa (e.g., Benin, Cameroon, Burkina Faso, Ghana, Malawi, Rwanda, South Africa, Tanzania, Uganda, Namibia, Kenya, Zambia) Latin America and Eastern Europe. In Asia, MTEF has already been introduced in Nepal, Pakistan and Bangladesh. Almost all the developing countries have 3 years MTEFs except Mozambique (6 years) and South Africa (4 years) (Houerou and Taliercio, 2002). Most of the countries integrated development and non- development expenditure in the MTEF except Guinea and Rwanda (only recurrent budget). In Kenya, Tanzania, South Africa, Uganda, civil society representatives participate in Sector Expenditure Frameworks (SEFs) preparing process (Houerou and Taliercio, 2002). Suriyaarachchi (2004) argued that Nepal has improved in development budget formulation and execution after intro ducing MTEF in Fiscal Year 2002-03. Assessments on the MTEF in many African countries are carried out considering the organizational change and procedural change rather than assessing the progress achieved through implementing the MTEF (Bird, A, 2003; Holmes and Evans, 2003; Jennes. G, 2003; Carlier. K, 2003; Short. J, 2003) 2.3 The MTEF and the public expenditure management (PEM) ADB (2001) suggested that ‘Public expenditure management (PEM) is the latest approach that emphasizes on achieving the desired policy outcomes through public sector budgeting. PEM considered expenditure as an instrument to produce optimal output whereas conventional budgetary process sets focus on spending as an input. PEM emphasizes on three main outcomes in budgetary system. The objectives of PEM are to maintain fiscal discipline, to promote allocative efficiency and to enhance operational efficiency (World Bank, 1998a cited in DFID, 2001, p-8). Allen Schick (1998, p-2) describes three basic elements of PEM as follows: 1. Aggregate fiscal discipline , which usually means that the public spending limit should not exceed the total revenue (spending in accordance with the affordability) and should be ‘sustainable over the medium-term and beyond (ibid, p-2). 2. Allocative efficiency , which refers to the condition that public spending, should be prudent. ‘Expenditure should be based on government priorities and it should be directed to the most beneficial programmes and activities that ultimately increase the effectiveness of the budgetary spending. It means that the allocation is better targeted shifting from ‘lesser to higher priorities and from less to more effective programs (ibid-2). 3. Operational efficiency means getting the best value of public money. Quality of the public services should be reasonable and it should be given at the lowest possible cost (ADB, 2001, p-1). According to Fjeldstad et al. (2004 p.2) cited in N.Oyugi. L, (2008, p- 2), The objectives of MTEF are : to maintain ‘aggregate fiscal discipline to promote ‘resource allocation to strategic priorities (allocative efficiency) to enhance ‘efficient and effective use of resources (operational efficiency) It suggests that there is a close connection between MTEF and PEM objectives. 2.3.1The MTEF and improvement in effectiveness and efficiency of budgetary expenditure ADB suggested that ‘the MTEF is one mechanism through which a PEM system can be operationalzed (2001- issue- 2, p-4). So, the improvement in effectiveness and efficiency of budgetary expenditure depends on to what extent the MTEF is sought to strengthen the PEM objectives. Fiscal discipline, allocative efficiency and operational efficiency are ‘interdependent (DFID, 2001). Allen Schick (1998, p. 2) argued that the lack of fiscal discipline leads to improper resource allocation and operational inefficiency. So, fiscal discipline can promote both allocative and operational efficiency. Fiscal discipline is maintained when implementation of budget ensures that actual expenditure does not exceed the spending limit and even when the increase in spending (% as a share of GDP) is consistent with the increase in revenue each year (Schick, A, 1998, p. 12, 67). So, two criteria- conformity with the spending limit and consistency in the trend of sectoral expenditure influence fiscal discipline. Allocative efficiency means the ability of the government to distribute resources considering the effectiveness of public programmes in accordance with its strategic objectives or policy planning. It is the capacity to reallocate resources from old to new priorities and from less to more effective programmes. Delegation of major allocative responsibility to sectoral ministries also promotes allocative efficiency (ibid, p. 17, 90). So, four criteria- change in sectoral allocation, strategic resource allocationlinked to policy planning, spending in priority areas/ programmes anddevolution of allocative responsibilities to line ministries influence allocative efficiency. MTEF offers greater predictability of fund since it establishes ‘baseline budgets for the upcoming years (while one year budget cannot) and thus improves operational efficiency (ADB, 2001- issue- 2, p-4). World Bank (1998) argues that predictability of funds (assurance to spending agencies as to when and where the resources will be available) is one of the major factors that influence operational efficiency (p- 28). Operational efficiency put emphasis on output and outcomes rather than input (Schick, A, 1998, p. 21). So, two criteria- greater predictability of public funds and progress in achieving output targets influence operational efficiency. 2.3.2 Evidence from Cross-country Studies This is to explore what criteria/ characteristics are set out by different countries to assess the impact of MTEF with respect to three levels of PEM outcomes. However, most of the studies are found to use one or more of the following criteria. Reducing fiscal deficit Since the adoption of the MTEF, Malawi reduced its fiscal deficit from 15% of GDP to 5% in the 1998/ 1999 budgetary- year and a further reduction to 4% in 1999/ 2000. So, it achieved some progress in reducing fiscal deficit (Anipe et al., 1999, p. 15). Adequate information availability In Cambodia, the MTEF was introduced in two ministries (education and health) and while preparing the sectoral expenditure for 2003-2005, health ministry had inadequate information regarding user fees and other payments, which in turn prevented from making a realistic estimation (Dom et al., 2003, p. 30). Above two criteria are concerned with aggregate fiscal discipline. Strategic resource allocation linked to policy, planning In case of Ghana, the MTEF was adopted in 1999; the resources were allocated in line with government development policy documents, e.g. ‘Ghana Vision 2020 (Anipa et al., 1999, p-21). The MTEF in Uganda achieved a considerable success in integrating the PEAP (‘Poverty Eradication Action Plan) within the Budgetary process and expenditure planning is carried out considering PEAP at the central and local government levels (Bird A, 2003). Change in sectoral allocation In Uganda, actual spending increased from 19.8% of total expenditure to 26.9% in 1998/99 (Bevan and Palomba, 2000, p. 18). In Benin, budgetary allocations had increased significantly to the ‘priority sector since 1998. Recurrent budget for education was 27.4% of the total expenditure in 1998 and it increased to 39.5% in 2001 and capital budget was 4.5% of the total expenditure in 1998 and that increased enormously to 40.7%. Allocations towards the health budget have increased from 1.4 percent of GDP in 1998 to 2.3 percent of GDP in 2001 (Carlier K, 2003, p. 23-24). Greater responsibility to line ministries The MTEF in Ghana promoted allocative efficiency as line ministries enjoying ‘greater responsibility for allocating resources to priority activities which ensures effective and efficient use of limited resources (Anipa et al., 1999, p- 7). Improvement in budgetary classification The MTEF in Malawi promotes allocative efficiency as it improved in budgetary classification by adopting activity- based budgeting that reviews the on- going programmes and creates sub- programmes to specify the activities (ibid, p. 12-25). From the above analysis it is evident that three criteria- strategic resource allocation linked to policy planning, change in sectoral allocation, improvement in budgetary classification are relevant to allocative efficiency and greater responsibility to line ministries is concerned with both allocative and operational efficiency (discussed in section 2.1.3). Fund predictability In Malawi, the allocation for health sector was 20.7% of the total development budget for the 1996/1997 fiscal year, but the actual release was only 3.6% of the development expenditure (Oxford Policy Management, 2000, p. 4). Reducing the deviation between budget and actual spending In case of Tanzania, from 1995 to 1998, the average BDI (Budget Deviation Index) was equal to 33% before introducing the MTEF and after the MTEF since 1999, it was reduced to 25% (Houerou and Taliercio, 2002, p. 21). Improvement in accountability and transparency In Namibia, MTEF has improved transparency as the framework explains inputs required for all programmes and expected outcomes. It also increased accountability because public has the access to the information regarding government priorities set in the medium term framework (N Oyugi L, 2008, p-12). The above two criteria are relevant to operational efficiency as discussed earlier. 2.4 Findings The country assessments of the MTEF indicate that all types of criteria/ conditions were not used by any single country to assess the impact of the MTEF. From the above analysis, the following key criteria/ principles can be brought together which appear to be important to examine the MTEF outcomes at three levels- fiscal discipline, allocative and operational efficiency. In the next chapter, the changes due to adopting the MTEF in the education and health budget will be examined. Asian development bank institute, 2005 http://www.adbi.org/files/2005.09.05.cpp.budget.classification.pdf Chapter 3: Changes due to the MTEF in Bangladesh This chapter addresses the first research question of Chapter- 1 which refers to the changes took place because of the MTEF introduced in the education and health budget. For this, it focuses on the budgetary reforms in Bangladesh. Experiences with the introduction of the MTEF are discussed and finally the changes due to adopting the MTEF (the traditional versus the MTEF) have been analysed. 3.1 Why the MTEF in Bangladesh Before the MTEF, budgets were prepared by making arbitrary incremental changes to the preceding years allocation. No strategic planning was present in budgetary process, non- development and development budgets were prepared separately and emphasis was laid on input rather than output (BCAS-2006/09, p. 53). Therefore, to enhance the credibility of the budget, to face the strategies set out in the PRSP with the macroeconomic framework and to ‘create a more disciplined, dynamic, efficient and modern public financial management system (MTBF-05/06, p. i), the MTEF was introduced. 3.2 Budgetary reforms and the MTEF in Bangladesh Bangladesh is a densely populated developing country which has a less public spending as a share of GDP (Socio- economic indicators are shown in Appendix- 1 ). For the effective and efficient use of scant resources, important reforms have been carried out in public financial management since 1990s. According to World Bank, ‘Bangladesh re-emerged as a democracy, successfully restarted reforms on critical fronts while ensuring sound macroeconomic and fiscal management (BCAS, 2006/09, p-9). A committee on Reforms in budgeting and Expenditure Control (CORBEC) was formed in March 1990 and this committee identified a number of problems including budgeting procedure, budget classification, budget presentation, separate non- development (recurrent) and development (investment) budgets preparation, emphasis laid on the inputs rather than outputs, etc. It was also difficult to identify the flow of funds as non- development and development budgets used separate classification systems and that was not computerized. To implement the recommendation of CORBEC, RIBEC (Reform in Budgeting and Expenditure Control) was formed with the financial suppo rt from the DFID (Department for International Development). A detailed operational unit wise and economic code wise classification chart was prepared and published, financial rules and reporting systems were upgraded and large number of Government officials were trained through the RIBEC from Ph MTEF Reform in Bangladesh Analysis MTEF Reform in Bangladesh Analysis Chapter 1: Introduction 1.1 Background This dissertation studies the MTEF (Medium Term Expenditure Framework) reform in Bangladesh. The MTEF was introduced in 4 ministries including Ministry of Education from 2005-06, named as MTBF (Medium Term Budgetary Framework). In the following year it included Ministry of Primary and Mass Education and Ministry of Health and Family Welfare. All other ministries will be brought under this framework in near future. The focus of this study is to explore the effect of introducing the MTEF in education and health budgets, explain the difference between the MTEF and traditional budgetary system in the formulation and execution of budget, analyze the effectiveness and efficiency of budgetary spending due to adopting the MTEF in the education and health sectors considering the three outcomes (maintaining fiscal discipline, promoting allocative Efficiency and enhancing operational efficiency) of public expenditure management (PEM) and finally to comment on whether improvements were achieved or not due to adopting the MTEF. This chapter outlines the relevancy of the study, the research questions to be answered in the subsequent chapters, methodology and analytical framework, limitations of the study and finally the presentation structure. 1.2 Rationale of the Study The main objective of formulating a budget under the MTEF is to link the budgetary allocations with governments policies, priorities. This is for ensuring efficient utilisation of limited public resources, which will enhance pro-poor growth and poverty reduction. One of the ‘policy priority triangles set out in countrys Poverty Reduction Strategy Paper (PRSP, 2005) is human development. So, Education and health sectors have been attached to top priority on investment by the Government. 1 According to MTBF (2005-06, p-01), ‘The Medium Term Budgetary Framework (MTBF) is a new budgeting approach generally known as the Medium Term Expenditure Framework (MTEF). Here, no basic difference between MTEF and MTBF has been stated. So, the term ‘MTEF will be used ubiquitously in this dissertation except quoting the references where relevant. These two sectors account for almost 20% of the total government expenditure each year in Bangladesh. The MTEF has been implemented in these two sectors since 2006 and many of the government policy objectives are linked with them. It is necessary to review the performance of the MTEF so that the output could be infused into ongoing works and corrective actions can be taken to planned activities accordingly. Thus, it seeks to investigate the impact of the MTEF on budgetary system of these two sectors. 1.3 Research Questions For this paper, the research questions are: 1. To what extent MTEF led to changesa in the formulation and execution of education and health budgets? 2. Has MTEF improved the effectivenessb and efficiencyc of budgetary expenditure on education and health? a. Mainly three types of changes- institutional, process (procedure) and technical (technological). b. Effectiveness is about how far does the activity (here MTEF) achieve its objective- and the objective itself is greater allocative efficiency. c. Efficiency here means at what cost was that result achieved, i.e. how many additional resources were used up in adopting MTEF (Here it means operational efficiency). 1.4 Broad Methodological Approach The analysis is purely desk- based. Secondary information sourced from review of literatures on the MTEF of different countries and other related articles of OECD, IMF, World Bank. UNICEF, PEFA, ADB, UNDP comprising as assessment and analysis of available documents on the MTEF and related processes. To answer the research questions data of national budget from 2001t o 2010, documents on the MTEF from 2006 to 2010, monthly fiscal report from 2004 to 2008- Finance Division, Ministry of Finance (MoF), Bangladesh Economic Review 2003-2008, IRBD by CPD (Centre for Policy Dialogue) from 2004- 2010, Public Expenditure Review on health- 2007, Bangladesh Bureau of Statistics, Sector wise budgets from Ministry of Education, Ministry of Primary and Mass Education, Ministry of Health and Family Welfare are used. Data from national budgets, BER, MTBF and PER played the key role to answer the research questions. Information was collected from interviewing few relevant staff of the MoF and consulti ng published documents and databases available in the Internet. The analysis is both qualitative and quantitative depending on the availability of the relevant data. 1.4.1 Analytical Framework 1) To answer the first question regarding changes due to adopting MTEF in Bangladesh, three elements will be analyzed institutional change, procedural change and technical change and this analysis will try to differentiate the qualitative changes took place due to adopting MTEF over the traditional budgeting system in relation to those three elements. 2) The MTEF budgets of education and health will be assessed taking into account the three basic elements of PEM (Public Expenditure Management) maintaining fiscal discipline, promoting allocative efficiency and enhancing operational efficiency (Schick, A, 1998) to get the answer of the second question concerning improvement in effectiveness and efficiency of budgetary spending after MTEF. Fiscal discipline, allocative efficiency and operational efficiency are interdependent (DFID, 2001). Allen Schick (1998, p. 2) argued that the lack of fiscal discipline leads to improper resource allocation and operates inefficiency. So, fiscal discipline promotes allocative and operational efficiency. MTEF sought to strengthen those three outcomes. Therefore, the effectiveness and efficiency of budgetary spending is improved when those three basic elements are achieved. The following criteria/ principles will be analysed to reveal the experiences of attaining those three basic elements Source: The above criteria in the table are generated on the basis of the literature of Schick, A (1998), World Bank (1998), DFID guidelines (2001) 1.4.1.1 Criteria setting The aim is to find out some criteria that influences the three objectives of PEM as well as matches with the ‘MTEF objectives of Bangladesh (discussed in chapter- 3..) so that the impact of the MTEF can be assessed. The analytical framework is adapted and it is mainly based on the literature of ‘Schick, A (1998), A Contemporary Approach to Public Expenditure Management, ‘World Bank (1998), Public Expenditure Management Handbook, DFID guidelines (2001) and some other empirical evidences (discussed in chapter- 2). Some other relevant criteria are not examined mainly due to data non- availability of appropriate data. For example, improvement in accountability and transparency relates to operational efficiency is not analysed due to data limitation and relevant information unavailability. A simple cross- section data is presented in tabular form where it is relevant in addressing the research questions. 1.6 Limitations The MTEF is now at its earlier stage in Bangladesh and no formal review or comprehensive assessment has been made on this new budgetary process. Sufficient information is not available and current and reliable data are also unobtainable. So, there is much reliance on government budgetary documents that cannot always be testified by evidences from other sources. 1.7 Presentation Structure Chapter 2 provides literature review on theoretical concept of MTEF, budgetary reforms followed both in developed and developing countries and assessments of the impact of the MTEF in those countries using the analytical framework specified for answering question two. Chapter 3 illustrates MTEF reform in Bangladesh and analysis of the traditional budgetary process and MTEF in view of the changes took place due to adopting MTEF to get the answer of question 1. Chapter 4 focuses on the assessment of impact of MTEF on education budget to get the answer to question-2 Chapter 5 focuses on the assessment of impact of MTEF on health budget to get the answer to question-2 Chapter 6 presents the conclusion where all the research questions are summarized. Chapter 2: Literature Review This chapter aims to explore various criteria/ principles that will be used to judge the performance of the MTEF in line with the three basic indicators of the public expenditure management (PEM). With this end in view, it provides literature review on theoretical concept of the MTEF, the theoretical explanation regarding the relationship between the MTEF and the public expenditure management (PEM). It also examines the empirical studies on the MTEF of different countries to reveal the different criteria/ conditions that were set to assess the role of the MTEF in promoting the efficiency and effectiveness of public expenditure. Finally it brings together some criteria that will be used to develop the analytical framework to assess the impact of the MTEF on education and health budget (the title of the dissertation) in Bangladesh. 2.1 The Theoretical Background 2.1.1 Concept of the MTEF The MTEF (Medium Term Expenditure Framework) is defined as an approach ‘designed specially to link planning, which has a medium term outlook, with the annual budget, and, as a consequence, to link budgetary expenditure more systematically with socially desired outcomes, (ADB, 2002, p-1). On the whole, MTEF integrated policy, planning and budgeting and allows expenditure to be ‘driven by policy priorities and disciplined by budget realities (World Bank, 1998). So, MTEF is a multiyear rolling expenditure under which a realistic projection of revenue receipts and expenditure is prepared over a three to five year period and spending priorities are set with reference to the Governments policy objectives and thus it provides a clear foundation for the annual budget. Under the MTEF, over a three year period, first year estimate is considered as budget, two outer years estimates as indicative figures. In the following year, the MTEF rolls forward and a new forward estimate for an other year is added. After necessary adjustment, the second year forward estimate is considered as budget as it becomes first year for the next MTEF. Figure 2.1: Rolling Principle of the MTEF (Source: ODI, 2002, p- 5) In many countries, the MTEF is implemented at two key levels, at the central government level which is referred to as the ‘top- down approach and at the spending agencies level, referred to as the ‘bottom- up approach (World Bank, 1998, p-40). In the ‘top- down approach, Ministry of Finance identified the ‘resource envelops (which is referred to as the indicative expenditure ceiling) and allocate those to the line ministries in view of their relative need. In the ‘bottom- up approach, line ministries or sectoral agencies formulates and estimates the actual and projected costs of the spending programmes within the spending limit for the medium term by examining the sectoral objectives and activities (Houerou and Taliercio, 2002, p-2). Table 2.1 Seven Stages of the MTEF Source: Adapted;[PEM Handbook (World Bank, 1998a: 47-51) cited in N.Oyugi. L, (2008, p-3, 4) and Houerou and Taliercio, (2002, p-3)] Annexure- 2 2.2 A General Overview of the Empirical Literature Many developed countries like UK, Australia, New Zealand, Austria, Sweden, Germany, USA are practising multi- year budgeting. The MTEF of UK maintains a firm consistency in controlling public expenditure having ‘focused on outcomes and efficient service delivery (HM Treasury, 2007). World Bank, DFID and other Aid agencies influenced many developing and transitional countries to initiate series of reforms (Wyane, 2005). The MTEF is introduced in more than 25 countries in Asia, Africa (e.g., Benin, Cameroon, Burkina Faso, Ghana, Malawi, Rwanda, South Africa, Tanzania, Uganda, Namibia, Kenya, Zambia) Latin America and Eastern Europe. In Asia, MTEF has already been introduced in Nepal, Pakistan and Bangladesh. Almost all the developing countries have 3 years MTEFs except Mozambique (6 years) and South Africa (4 years) (Houerou and Taliercio, 2002). Most of the countries integrated development and non- development expenditure in the MTEF except Guinea and Rwanda (only recurrent budget). In Kenya, Tanzania, South Africa, Uganda, civil society representatives participate in Sector Expenditure Frameworks (SEFs) preparing process (Houerou and Taliercio, 2002). Suriyaarachchi (2004) argued that Nepal has improved in development budget formulation and execution after intro ducing MTEF in Fiscal Year 2002-03. Assessments on the MTEF in many African countries are carried out considering the organizational change and procedural change rather than assessing the progress achieved through implementing the MTEF (Bird, A, 2003; Holmes and Evans, 2003; Jennes. G, 2003; Carlier. K, 2003; Short. J, 2003) 2.3 The MTEF and the public expenditure management (PEM) ADB (2001) suggested that ‘Public expenditure management (PEM) is the latest approach that emphasizes on achieving the desired policy outcomes through public sector budgeting. PEM considered expenditure as an instrument to produce optimal output whereas conventional budgetary process sets focus on spending as an input. PEM emphasizes on three main outcomes in budgetary system. The objectives of PEM are to maintain fiscal discipline, to promote allocative efficiency and to enhance operational efficiency (World Bank, 1998a cited in DFID, 2001, p-8). Allen Schick (1998, p-2) describes three basic elements of PEM as follows: 1. Aggregate fiscal discipline , which usually means that the public spending limit should not exceed the total revenue (spending in accordance with the affordability) and should be ‘sustainable over the medium-term and beyond (ibid, p-2). 2. Allocative efficiency , which refers to the condition that public spending, should be prudent. ‘Expenditure should be based on government priorities and it should be directed to the most beneficial programmes and activities that ultimately increase the effectiveness of the budgetary spending. It means that the allocation is better targeted shifting from ‘lesser to higher priorities and from less to more effective programs (ibid-2). 3. Operational efficiency means getting the best value of public money. Quality of the public services should be reasonable and it should be given at the lowest possible cost (ADB, 2001, p-1). According to Fjeldstad et al. (2004 p.2) cited in N.Oyugi. L, (2008, p- 2), The objectives of MTEF are : to maintain ‘aggregate fiscal discipline to promote ‘resource allocation to strategic priorities (allocative efficiency) to enhance ‘efficient and effective use of resources (operational efficiency) It suggests that there is a close connection between MTEF and PEM objectives. 2.3.1The MTEF and improvement in effectiveness and efficiency of budgetary expenditure ADB suggested that ‘the MTEF is one mechanism through which a PEM system can be operationalzed (2001- issue- 2, p-4). So, the improvement in effectiveness and efficiency of budgetary expenditure depends on to what extent the MTEF is sought to strengthen the PEM objectives. Fiscal discipline, allocative efficiency and operational efficiency are ‘interdependent (DFID, 2001). Allen Schick (1998, p. 2) argued that the lack of fiscal discipline leads to improper resource allocation and operational inefficiency. So, fiscal discipline can promote both allocative and operational efficiency. Fiscal discipline is maintained when implementation of budget ensures that actual expenditure does not exceed the spending limit and even when the increase in spending (% as a share of GDP) is consistent with the increase in revenue each year (Schick, A, 1998, p. 12, 67). So, two criteria- conformity with the spending limit and consistency in the trend of sectoral expenditure influence fiscal discipline. Allocative efficiency means the ability of the government to distribute resources considering the effectiveness of public programmes in accordance with its strategic objectives or policy planning. It is the capacity to reallocate resources from old to new priorities and from less to more effective programmes. Delegation of major allocative responsibility to sectoral ministries also promotes allocative efficiency (ibid, p. 17, 90). So, four criteria- change in sectoral allocation, strategic resource allocationlinked to policy planning, spending in priority areas/ programmes anddevolution of allocative responsibilities to line ministries influence allocative efficiency. MTEF offers greater predictability of fund since it establishes ‘baseline budgets for the upcoming years (while one year budget cannot) and thus improves operational efficiency (ADB, 2001- issue- 2, p-4). World Bank (1998) argues that predictability of funds (assurance to spending agencies as to when and where the resources will be available) is one of the major factors that influence operational efficiency (p- 28). Operational efficiency put emphasis on output and outcomes rather than input (Schick, A, 1998, p. 21). So, two criteria- greater predictability of public funds and progress in achieving output targets influence operational efficiency. 2.3.2 Evidence from Cross-country Studies This is to explore what criteria/ characteristics are set out by different countries to assess the impact of MTEF with respect to three levels of PEM outcomes. However, most of the studies are found to use one or more of the following criteria. Reducing fiscal deficit Since the adoption of the MTEF, Malawi reduced its fiscal deficit from 15% of GDP to 5% in the 1998/ 1999 budgetary- year and a further reduction to 4% in 1999/ 2000. So, it achieved some progress in reducing fiscal deficit (Anipe et al., 1999, p. 15). Adequate information availability In Cambodia, the MTEF was introduced in two ministries (education and health) and while preparing the sectoral expenditure for 2003-2005, health ministry had inadequate information regarding user fees and other payments, which in turn prevented from making a realistic estimation (Dom et al., 2003, p. 30). Above two criteria are concerned with aggregate fiscal discipline. Strategic resource allocation linked to policy, planning In case of Ghana, the MTEF was adopted in 1999; the resources were allocated in line with government development policy documents, e.g. ‘Ghana Vision 2020 (Anipa et al., 1999, p-21). The MTEF in Uganda achieved a considerable success in integrating the PEAP (‘Poverty Eradication Action Plan) within the Budgetary process and expenditure planning is carried out considering PEAP at the central and local government levels (Bird A, 2003). Change in sectoral allocation In Uganda, actual spending increased from 19.8% of total expenditure to 26.9% in 1998/99 (Bevan and Palomba, 2000, p. 18). In Benin, budgetary allocations had increased significantly to the ‘priority sector since 1998. Recurrent budget for education was 27.4% of the total expenditure in 1998 and it increased to 39.5% in 2001 and capital budget was 4.5% of the total expenditure in 1998 and that increased enormously to 40.7%. Allocations towards the health budget have increased from 1.4 percent of GDP in 1998 to 2.3 percent of GDP in 2001 (Carlier K, 2003, p. 23-24). Greater responsibility to line ministries The MTEF in Ghana promoted allocative efficiency as line ministries enjoying ‘greater responsibility for allocating resources to priority activities which ensures effective and efficient use of limited resources (Anipa et al., 1999, p- 7). Improvement in budgetary classification The MTEF in Malawi promotes allocative efficiency as it improved in budgetary classification by adopting activity- based budgeting that reviews the on- going programmes and creates sub- programmes to specify the activities (ibid, p. 12-25). From the above analysis it is evident that three criteria- strategic resource allocation linked to policy planning, change in sectoral allocation, improvement in budgetary classification are relevant to allocative efficiency and greater responsibility to line ministries is concerned with both allocative and operational efficiency (discussed in section 2.1.3). Fund predictability In Malawi, the allocation for health sector was 20.7% of the total development budget for the 1996/1997 fiscal year, but the actual release was only 3.6% of the development expenditure (Oxford Policy Management, 2000, p. 4). Reducing the deviation between budget and actual spending In case of Tanzania, from 1995 to 1998, the average BDI (Budget Deviation Index) was equal to 33% before introducing the MTEF and after the MTEF since 1999, it was reduced to 25% (Houerou and Taliercio, 2002, p. 21). Improvement in accountability and transparency In Namibia, MTEF has improved transparency as the framework explains inputs required for all programmes and expected outcomes. It also increased accountability because public has the access to the information regarding government priorities set in the medium term framework (N Oyugi L, 2008, p-12). The above two criteria are relevant to operational efficiency as discussed earlier. 2.4 Findings The country assessments of the MTEF indicate that all types of criteria/ conditions were not used by any single country to assess the impact of the MTEF. From the above analysis, the following key criteria/ principles can be brought together which appear to be important to examine the MTEF outcomes at three levels- fiscal discipline, allocative and operational efficiency. In the next chapter, the changes due to adopting the MTEF in the education and health budget will be examined. Asian development bank institute, 2005 http://www.adbi.org/files/2005.09.05.cpp.budget.classification.pdf Chapter 3: Changes due to the MTEF in Bangladesh This chapter addresses the first research question of Chapter- 1 which refers to the changes took place because of the MTEF introduced in the education and health budget. For this, it focuses on the budgetary reforms in Bangladesh. Experiences with the introduction of the MTEF are discussed and finally the changes due to adopting the MTEF (the traditional versus the MTEF) have been analysed. 3.1 Why the MTEF in Bangladesh Before the MTEF, budgets were prepared by making arbitrary incremental changes to the preceding years allocation. No strategic planning was present in budgetary process, non- development and development budgets were prepared separately and emphasis was laid on input rather than output (BCAS-2006/09, p. 53). Therefore, to enhance the credibility of the budget, to face the strategies set out in the PRSP with the macroeconomic framework and to ‘create a more disciplined, dynamic, efficient and modern public financial management system (MTBF-05/06, p. i), the MTEF was introduced. 3.2 Budgetary reforms and the MTEF in Bangladesh Bangladesh is a densely populated developing country which has a less public spending as a share of GDP (Socio- economic indicators are shown in Appendix- 1 ). For the effective and efficient use of scant resources, important reforms have been carried out in public financial management since 1990s. According to World Bank, ‘Bangladesh re-emerged as a democracy, successfully restarted reforms on critical fronts while ensuring sound macroeconomic and fiscal management (BCAS, 2006/09, p-9). A committee on Reforms in budgeting and Expenditure Control (CORBEC) was formed in March 1990 and this committee identified a number of problems including budgeting procedure, budget classification, budget presentation, separate non- development (recurrent) and development (investment) budgets preparation, emphasis laid on the inputs rather than outputs, etc. It was also difficult to identify the flow of funds as non- development and development budgets used separate classification systems and that was not computerized. To implement the recommendation of CORBEC, RIBEC (Reform in Budgeting and Expenditure Control) was formed with the financial suppo rt from the DFID (Department for International Development). A detailed operational unit wise and economic code wise classification chart was prepared and published, financial rules and reporting systems were upgraded and large number of Government officials were trained through the RIBEC from Ph

Bilingual Education Blows Away the Competition :: Essays Papers

Bilingual Education Blows Away the Competition "It would be scary if bilingual education wasnt there, because I wouldnt be able to understand the teacher, and I wouldnt know what to do, and I would have problems," said one young supporter of bilingual education (Keifer 10). Education is the single most important tool for future greatness. It is necessary for success in all endeavors. Those who need more assistance in their learning still deserve to receive the best education possible. Just because they do not learn in the same way, does not mean that they can be neglected in this meaningful aspect of life. Language minority children are part of that category. They have trouble learning because they are Limited English Proficient (LEP). In Arizona, these children are most likely to come from a Mexican heritage since the state is so close to Mexico. For over a hundred years schools have been implementing a program that teaches LEP children in their native language first, then slowly transitioning them into learning in English. During their entire education the students are continually learning the English language. This long-term focus of learning English as well as learning standard subjects in the native language is geared so the students will not fall behind on their general studies. This method is highly regarded because it develops the childrens native language as well as English. They need this type of bilingual education to keep their communication skills within their culture. In the past there has been a large controversy surrounding the education of minority children. The quality of education in the bilingual education programs across the country is being questioned. The battle to eliminate bilingual education has succeeded in California. In 1998, the "English for the Children" initiative, led by Ron Unz, met strong opposition as well as strong agreement. The initiative called for only one year of "structured English immersion" for LEP students, followed by reclassification into an English-only classroom. This means that these young children will be thrust into an English-speaking classroom with only one year of English instruction. They will be left to "sink or swim" in these classes, a method which the Supreme Court found to violate their right to an equal education. This thoughtless initiative went on to win a victory in California at the expense of many children who will now find it even more difficult to survive in the education system.

How convincingly the book creates a sense of social environment in which subject grew up?

Frank McCourt has used the main themes of his autobiography Angela's Ashes convincingly to create a sense of social environment he grew up in. Main themes include poverty, pauperized living conditions, poor sanitation and power of the Catholic Church. Alongside the main themes, McCourt uses symbols, memories, vivid descriptions, outside and narrative comments and events relating to the main themes. Poverty is the leading cause of pauperized living condition as well as poor sanitation, these lead to the social environment Frank spent his childhood growing up in. The living conditions in the slums of Limerick itself details Franks environment. The McCourt family leaves New York for a new start in Ireland and settle in Limerick during the depression. The Deprsssion symbolize hardship for many. Alcohol is a major concern that affects the McCourt's. Malachy's alcohol problem makes his family suffer. Any chance of the basic needs of survival is dependent on Malachy's wages. â€Å"Are you coming home so that we can have a bit of supper or will it be midnight with no money in your pocket and you singing Kevin Barry and the rest of that sad songs†. Angela is asking Malachy if the kids will be fed tonight or will they starve. The fact Malachy drinks way the money convinces us the family have no other means of survival and healthy state of living. Without money we sense and imagine the state they live in. â€Å"Out in the Atlantic Ocean great sheets of rain gathered to drift slowly up the River Shannon and settle forever in Limerick. The rain dampened the city from the feast and the Circumcicin to New Year's Eve. It created a cacophony of hacking coughs, bronchial rattles, asthmatic wheezes, consumptive croaks. It turned roses into fountains, lungs into bacterial sponges†. Franks description of Limericks sums up the environment. Miserable weather creating misery and diseases taking lives of many. McCourt's description gives us a visual images that somehow convinces us how miserable the conditions are. Franks gets a job delivering newspaper. One day there is an emergency and mayhem erupts. McCaffey and Frank and another boy Eamon are to rip out page 16 of the John O' London's Weekly. Ever single issue in the city no matter what people say. Here the boys are hysterically running around town ripping out the pages on birth control. McCaffrey shows such determination when the shopkeeper has said they have sold many issues he demands their names that they are in danger of losing their â€Å"immortal souls† This event convinces us the power of the Catholic Church is and the it impact on society. Birth control in â€Å"the holiest city† was banned. A one page article emphasizes the lengths Catholics go to protecting their religious beliefs. McCaffrey's biggest customer Mr. Hutchinson in cursing him for storming into his shop and creating havoc, and McCaffrey replies to him † See what happens when you're not a member of the True Church†. Protestants and Catholics dispute over religion. People in Frank's Community are greatly religious. School masters makes sure you know everything about Christ. Malachy treats the portrait of the Pope as though it is sacred and valuable. The honor of the Catholic Churc h is overwhelming and creates a sense of how holy the society is. The fact people followed the rules and were faithful to the Church gives us a sense of how religious the environment was. McCaffrey was prepared to go lengths to protect the faith and beliefs fellow Catholics. Frank has many memories of his childhood. There has been pain, misery and some happy times. The memories of his small house in Roden Lane holds many memories. In winter, downstairs floods, the family are forced to move upstairs. â€Å"It's like going away on our holiday to a warm foreign place like Italy,† Malachy assures the kids. Abandoning downstairs convinces us, the flood is extremely bad. We sense the condition are undesirable and deplorable. Convincingly this house creates a sense of social environment, the state of the house simply shows it. Symbol of the environment are seen in this book. The lavatory in the McCourt's rented home is a communal toilet shared by 12 families. It symbolizes poor-sanitation and lack of finances. It emphasizes the need for cleaner conditions, † the lavatory will kill us all with diseases,† Angela's says. In fact it is a concern, their health is at risk of germs that fill the household. Frank is awakened at night by sounds of people emptying their chamber pots suggesting no privacy. People coming in and out. It convinces us how rundown the society is. They can only afford one toilet a lane for 12 families. I can imagine from the lavatory the house is shabby making the society just as bad. We sense poor hygiene creating a sense in our mind of how Frank grew up. McCourt himself said if he † were to pick a symbol for my life, and image, it would be that lavatory that all the people emptied their buckets into. † Franks childhood was about surviving each day and feeding his family, his goal to reach America. He says, the lavatory symbolizes his life struggling to get through each day. Angela's Ashes includes many details used to create a sense of Frank's childhood social environment. Throughout the book many descriptions of memorable experiences and sights are used to detail the surrounding he grew up with. This whole book is about dealing with the slums and the dreadful conditions that we strongly sense in our heads. After reading Angela's Ashes you will be left with many visuals McCourt has got you to create and picture in your head that make out his â€Å"miserable Irish Catholic Childhood†.

Manifest Destiny, By John O Sullivan - 1292 Words

During the mid-nineteenth century, the rise of new territories increased the desire of Americans to expand into new territories in the western region. The term â€Å"Manifest Destiny† was first introduced by a magazine editor, John O’Sullivan, written in the United States Magazine and Democratic Review in 1845 to express the idea that the United States had a unique role in expanding the nation (OpenStax College 316,483). Manifest Destiny is widely defined as a justification of continental expansion as a calling to the American citizens to unify the land into the Union. I view Manifest Destiny as white males expressing their ideals of white supremacy unavoidably expanding new territories not yet defined by others (). With the new western land came the revival of the issue of slavery, should new territories become free or slave states? In several cases, the white settlers inflicted their morals about their policies and views of slavery in new territories acquired and bypa ssed all other principles of different races. They saw that their morals were above all and that they received a message from God to colonize the new land for themselves. Although Manifest Destiny posed conflict against Native Americans and slaves, new land and trade routes steered the United States to enter a realm of economic prosperity. Securing new land in the west more than doubled the size of the nation. New territories were obtained in Northern Georgia, Texas, Oregon, and California to name a few. InShow MoreRelatedManifest Destiny, By John L. O Sullivan925 Words   |  4 Pagesâ€Å"In 1845, John L. O Sullivan, a newspaper reporter in New York City, coined the phrase manifest destiny. O Sullivan claimed that it was the God-given destiny of the United States of America to spread over North America. 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The blurred lines of entitlement and ethics were unfortunately crossed again, but this time the driving force was fear. In 1919, the start of the Red scare after the Great War and