The Basis Of South Africa’s Annual Budgets Needs An Overhaul. Here’s Why, And How

MICHAEL KOFI OCRAN|

GOVERNMENTS in most developing countries use medium-term expenditure frameworks as fiscal policy instruments to match the imperatives of policy, planning and budgeting over the medium-term horizon.

South Africa adopted the framework in 1998.

Countries with strong ties to the Bretton Woods institutions – the International Monetary Fund (IMF) and the World Bank – have adopted the medium-term expenditure framework as the main driver of budget policy. Like macroeconomic management orthodoxy, the Washington consensus forms the basis of this approach. The World Bank’s push for the adoption of frameworks has been subtle. For instance since 1991, they have been an integral part of the Bank’s products such as technical assistance, lending operations, and analytical and advisory services.

The thrust of medium-term expenditure frameworks is budgeting and public financial management. Indeed, the planning inherent in them is financial planning. That is the problem. They facilitate multi-year budget planning.