Strengthening Public Budget Management Through A Medium-term Expenditure Framework(MTEF)

The medium-term expenditure framework (MTEF) constitutes a new approach to budgeting, in order to addresses shortcomings of annual budgeting. The conceptual promise of MTEFs is through a medium-term perspective to distribute public resource, so that to achieve better fiscal discipline, strategic allocation of resources, and efficiency and effectiveness of public spending.Nowadays, over two-thirds of all countries, and nearly all advanced economies, have incorporated a medium term view into their budgeting process. While in China, the well-known shortcoming of annual budget, including short-sightedness, conservatism, and parochialism, still troubles the budgeting system, which makes an MTEF necessary.This article takes the coastal municipality (S City) as a research sample, doing feasibility analysis and modeling discussion to prove the prospective effect of MTEF.First, the article makes a general description of the basic elements, stages and targets of the MTEF. With investigation of the domestic and international case studies, try to point out that it is crucial to find the right way to implement MTEF. A successful MTEF requires policy makers to look across sectors, programs, and projects to examine how public spending can best serve national development objectives over the medium term.Secondly, in accordance with the unequal development of fiscal situation in China, the article argues that take some pilots in cities with relatively good fiscal disciplines comes to be a choice. This article takes S City as a selective candidate, since S City now has both the qualifications and needs to implement the MTEF. With analytical instrument of MTEF, the article tries to make a principal forecast of the fiscal situation in S City in the coming years. Make the conclusion that as an advanced structure, MTEF has vast importance to the public budget management, and providing analytical support for further discussions and pilots in China.Based on these discussions, the article raises a plan of the initial MTEF model pilot in S City. The plan includes the basic factors and preparation for this pilot, and discusses about the possible challenges, which makes it meaningful for future pilots.