Medium-Term Budgetary Framework for Fiscal Efficiency: A Conceptual Analysis of Bangladesh Case

Abstract

Medium-Term Budgetary Framework (MTBF) is one of the most important policy reforms in the fiscal management of both developing and developed countries of the world. Over the last two decades, on advocacy and technical assistance of World Bank and IMF more than 132 countries of the globe successfully implemented this new form of performance-based budgetary mechanism. As a part of public finance management reform, Bangladesh first introduced MTBF in 2004 and piloted the process for FY 2005-2006 in four ministries successfully. From the FY 2011-12 MTBF has already been rolled out to all ministries and agencies of Bangladesh. The paper discusses the conceptual framework of MTBF that has been following in Bangladesh along with a very limited discussion of empirical evidence of achieving fiscal efficiency by some developing countries. The paper is based on secondary data. On reviewing the relevant literature, it is found that the MTBF mechanism is scientifically devised and logically organized where achieving fiscal discipline, allocative and operational efficiency are the main focus of it. The paper also explored that the new form of a budgetary framework is a radical shift from traditional and compliance-based budgetary system to performance-based, result-oriented, priority-focused budgetary mechanism. Finally, the paper places some empirical evidence on fiscal discipline, allocative and operational efficiency that has been achieved by MTBF or MTEF-adopting countries.