thailand’s medium term expenditure framework

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





Remaining Budgets





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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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

Q&A

Website : www.bb.go.th E-mail address : [email protected]

Thank you

thailand’s medium term expenditure framework

Documents

budget ceiling

medium term plan

minimum loan rate

time deposit growth

time deposit rate

medium term horizon

macro fiscal projection

import growth