thailand’s medium term expenditure framework
DESCRIPTION
Thailand’s Medium Term Expenditure Framework. The Bureau of the Budget The prime Minister’s of Office Royal Thai Government. Relationship of Government Agencies. Monetary Policy Macroeconomic Forecast. Bank of Thailand. 5 yr national plan 4 yr government Administrative Plan - PowerPoint PPT PresentationTRANSCRIPT
Thailand’sMedium Term Expenditure
Framework
The Bureau of the BudgetThe prime Minister’s of OfficeRoyal Thai Government
-Budget Policy-Budget Allocation-Revenue & Expenditure estimates-Monitoring & Evaluation
Relationship of Government Agencies
BOB -Monetary Policy-Macroeconomic Forecast
Bank of Thailand
-Fiscal Policy-Revenue Estimates-Macroeconomic Forecast
MOF
-5 yr national plan-4 yr government Administrative Plan-Macroeconomic Forecast
NESDB
- 4 yr Plan- Annual Plan- Budget Request
Gov. Agencies
Does your budget have medium term horizon?
How does it relate to the annual budget and the medium term plan,
How is this functional and useful in achieving national goals and objectives?
What are the issues and challenges in establishing and implementing and MTEF?
MTEF
SPBBS : The Principle
• Top-down policy driven
• Strategic allocation
• Fiscal discipline
• Effective budgeting
• People oriented
• Deconcentration
• Management flexibility
• Good governance
• Financial disclosure
Policy aspects Management aspects
Elements of SPBBS
Good Governance
Result oriented Strategic Target Ministry Target Output and KPI
Devolution
Medium Term Expenditure Framework - MTEF
Comprehensiveness
Monitoring and Evaluation
Implementation of SPBBS & MTEF
SPBBS Implemented in 2001
MTEF
Implemented in 2003
7
MEDIUM-TERM BUDGET PLANNING FRAMEWORK
National Economic and Social Development PlanNational Economic and
Social Development Plan
Government Administrative Plan
Government Administrative Plan
MTEF (Top-Down)MTEF (Top-Down)
MTEF (Bottom-Up)MTEF (Bottom-Up)
Government PolicyGovernment Policy National Investment Plan
National Investment Plan
Annual Budgeting CeilingAnnual Budgeting Ceiling Fiscal Policy FormulationFiscal Policy Formulation
Budget Allocation Strategy
Budget Allocation Strategy
ANNUAL BUDGET PLANNING FRAMEWORK Annual Budget
PreparationAnnual Budget
Preparation
Macro-economic Outlook
Macro-economic Outlook
Revenue ForecastRevenue Forecast
Public Debt and Fiscal Risks
Public Debt and Fiscal Risks
Fiscal RulesFiscal Rules
Demand of Funds Supply
of Funds
Medium TermExpenditure Framework (MTEF)cover both top down and bottom up
estimates:
Macro fiscal projection – to establish budget ceiling based on resources (such as taxes, fiscal policy) and constraints (such as debt, and contingent liabilities), and stating all economic assumptions
Micro baseline projection – to establish baseline expenditures based on existing policies at agency level
Prudent Reconciliation process of top-down and bottom-up projections
MTEF Process (simplified)
9
New sectoral demand for
t+3 (priority/cost
)
Updated cost estimate of
existing policy/program
Sectoral Budget
Preparation
Macro-economic
forecasting
Fiscal target
Total expenditure setting for multi-
years
Sectoral ceiling
setting for multi-years
Annual budget
formulation
Macro Economic Assumption
Source : Bureau of the Budget, Bank of Thailand, NESDB
Indicators 2012 2013 2014 2015 2016Real GDP growth (%pa)
6.15.5 – 6.0
4.0 – 5.0
4.0 – 5.0
4.0 – 5.0
Inflation rate (%)3.5
3.0 – 4.0
3.0 – 4.0
3.0 – 4.0
3.0 – 4.0
Import growth (%pa)
8.58 10.00 10.00 10.00 10.00
Time deposit rate (%)
1.82 1.82 1.82 1.82 1.82
Time deposit growth (%pa)
5.50 5.00 5.00 5.00 5.00
Minimum loan rate (%)
7.13 7.13 7.13 7.13 7.13
Loan on private sector (%pa)
9.20 7.00 7.00 7.00 7.00
Bureau of The Budget’s strategy measurement
Minimum Investment
Subsidy
External Borrowing
Internal Borrowing
Personnal Expenditure
Remaining Budgets(Fiscal Space)
Loss fromFIDF
SOEs
Government External
BorrowingProject/Program
Loan
Revolving FundLocal Authority
Fiscal Sustainability F
ramew
ork
To be accordance with human
power improvement
Commitment Expenditure
Education Public health
Investment
Social network
Tourism
Infrastructure
The measurement
of budget allocation is essential
Fiscal Sustainability Framework
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Remaining Budgets
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Remaining Budgets
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Remaining Budgets
External
Borrowing
Internal Borrowi
ng
Subsidy and Funds
Personnel Expenditure
Minimum Investment
Public Debt / GDP < 60% Debt Service / Budget < 15% Balance Budget
Remaining Budgets
Key FiguresFiscal Year 2013 2014 2015 2016
Revenue Projection Unit : Millions of Baht
On Budget Basis 2,241,007 2,474,898 2,731,389 3,007,281
Expenditure Projection Unit : Millions of BahtExpenditure *2,400,000 1,990,378 1,829,963 1,899,075
1.Current Expenditure 1,294,496 1,327,773 1,338,196 1,373,335(% of total) 54% 49% 46%
1.1 Personal Exp. 579,198 612,596 647,998 685,5241.2 Operating Exp. 213,266 213,266 213,266 213,2661.3 Interest Payment 124,933 101,261 84,158 75,3651.4 Commitment Exp. 32,663 40,701 15,995 3,2841.5 Revolving Fund 160,060 165,122 170,558 177,2201.6 Transfer and Subsidy 184,375 194,826 206,220 218,675
2. Capital Expenditure 272,648 314,633 260,708 245,424(% of total) 13% 10% 8%
2.1 Subsidy Local Authority 174,659 192,531 212,724 235,5732.2 Commitment Exp. 97,989 122,102 47,984 9,851
3.Principle Repayment 225,369 347,972 231,060 280,316(% of total) 14% 8% 9%
Fiscal Space * 484,520 901,426 1,108,206
TAX
Indirect Tax
Direct Tax
PIT
PTT
EXCISE
VAT
Import Duty
SBT
CIT
Revenue Module
Domestic
Borrowing
Estimation
Projection
SOEs domestic debt
Govt domestic debt
Total domestic debt
Domestic Borrowings
External Borrowing
Sensitivity Analysis on Interest Rate and Exchange Rate
Query Function
Exchange Rate Converting
External Borrowings
Assume Disbursement Patterns : ADiPs 22 branch
External Borrowings
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สาขั้ากู้ารศั-กู้ษาและกู้ารฝึ/กู้อุบุรม
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สาขั้าขั้นส�งิทุางิบุกู้
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Data-baseExternal Debt
Disbursement Interest Payment Principle Payment
1. To forecast the outer year budget (year 2-4) need both unit cost and output:lacking of quantitative indicators make the output forecast a difficult task
2. Understanding of government agencies
3. The rolling MTEF make the forecast less important.
4.Dependence on external economy
5. Political Stability
Lessons Learned