How to Develop and Implement a Medium-Term Fiscal Framework

Teresa Curristine, Isabell Adenauer, Virginia Alonso-Albarran, John Grinyer, Koon Hui Tee, Claude Wendling and Delphine Moretti

No 2024/005, IMF Fiscal Affairs Department from International Monetary Fund

Abstract: This Note provides guidance on developing and implementing a medium-term fiscal framework (MTFF). MTFFs aim to promote fiscal discipline and sustainability, transparency, and better-informed fiscal decisions. An MTFF comprises a set of institutional arrangements for prioritizing, presenting, reporting, and managing fiscal aggregates - revenue, expenditure, balance, and debt - generally over a three-to-five-year period. It incorporates a fiscal strategy, medium-term projections of key macroeconomic variables and fiscal aggregates, and ceilings on total expenditure to guide subsequent annual budgets. By introducing a medium-term perspective into fiscal and budgetary decision making, MTFFs provide a clearer understanding of the impact, trade-offs, and risks of policy choices. MTFFs contribute to enhancing transparency and accountability by communicating the government’s medium-term fiscal goals, policies, and fiscal performance. Ultimately, clarity on medium-term fiscal plans and on their effective implementation can bolster confidence in the government’s ability to manage its finances prudently and competently. In addition to providing guidance on how to design an MTFF and the institutional and technical arrangements needed to support implementation, the Note discusses key challenges and presents country examples from across the globe by income group and concludes with lessons learned.

Keywords: fiscal frameworks; fiscal planning; budget cycles; MTFF; medium-term fiscal framework; emerging market economy country example; MTFF specification; koon hui tee; MTFF projection Tool; MTFF time horizon; Budget planning and preparation; Fiscal rules; Fiscal risks; Caribbean (search for similar items in EconPapers)
Pages: 46
Date: 2024-09-26
New Economics Papers: this item is included in nep-acc
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=555581 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfhtn:2024/005

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Fiscal Affairs Department from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi (amodi@imf.org).