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 A Pre-budget Exercise as a Pro-poor Development Tool*
Phub W. Dorji**
Abstract
In the Tenth Plan (2008 - 2013), the Royal Government of
Bhutan introduces a new results-based planning framework to
help achieve its strategic commitment to poverty reduction. The
three-year rolling Medium Term Fiscal Framework seeks to
integrate development priorities, budgeting procedures, and
implementation outcomes into a "dynamic, efficient, responsive,
and results oriented" process (Draft Tenth Five Year Plan:
[2008 - 2013]). This paper attempts to underline some ofthe
issues relevant to, specifically, the expenditure budgeting facet
or, explicitly, the Medium Term Expenditure Framework
process of the proposed framework. It presents some
qualitative (and quantitative) evidence for the incorporation of
such a pre-budget exercise in the national budgeting process.
And it seeks to reason that the benefits of such a practice
inevitably accrue to the poor in developing countries. To do so, I
draw heavily from the works of two World Bank authors-
Philippe Le Houerou and Robert Taliercio- whose research in
the Africa region demonstrates many similarities and sheds
much light on the experiences with the MTEF in Bhutan.
Introduction
A general consensus in development studies is that there is a
significantly positive relationship between economic growth,
income distribution, and poverty. The rise in mean incomes,
contingent on neutrality with respect to income distribution,
* The term "pro-poor development tool" has been previously used in
an MTEF document prepared for the erstwhile Department of Budget
and Accounts, Ministry of Finance, Royal Government of Bhutan.
The views presented in this paper are solely those of the author's
and do not necessarily reflect those of the Ministry of Finance, Royal
Government of Bhutan. My sincerest gratitude to Mr. Karma
Tshiteem.
** Planning Officer, Ministry of Finance.
 Journal of Bhutan Studies
is shown to be favourable for the poor, i National governments
of developing countries all over the world use a mix of both
fiscal and monetary policies2 to try and achieve these goals.
But the disproportionately large role and importance of
government in poorer countries have increasingly led to a
focus on its fiscal powers such as tax and expenditure
policies3 to redistribute income, and thus, to alleviate poverty.
Even here, the primary emphasis is often on government
expenditure policies given the limits of taxation, especially in
poor countries, as evidenced from a number of empirical
studies.4 This is why sectoral allocations, subsidies, public
investments, and, for some, entitlements, rank high as
redistributive budgetary practices.
Clearly the normative goal of equity is inherent and widely
addressed in most public expenditure programs. What receive
less attention are the inefficiencies in the budget management
systems and processes of developing country governments in
ensuring that their modest resources meet the needs of the
largest number of constituents. This paper emphasises then
that it is not just the "end" allocation which is important, but
the "overaU" expenditure process which needs to be pragmatic
for reasons of scarcity of resources, weak capacities and other
such shortcomings endemic to developing countries as
discussed further on.
A step in achieving this is to reform conventional budget
practices by incorporating a "pre-budget exercise" which
takes stock of the resources available (or not available), and
i See Khan (2001) for public policy implications of rural poverty in
developing countries.
2 Perkins et al. (2006) use the term "financial policy" synonymously
with "monetary policy."
3 See Perkins et al. (2006), especially chapter twelve, for more on
fiscal policy strategies adopted by governments in developing
countries for redistribution purposes. .
4 See Perkins et al. (2006) footnotes 21, 22, 23, and 25 on p. 466
and p. 469, which refers to various studies on the implications of tax
reforms in Latin America, Malaysia and Indonesia.
114
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links this assessment to expenditure planning in a dynamic
medium-term agenda of three or five years. The medium-term
expenditure framework (MTEF)5 provides this linking
structure by matching the "bottom-up" costs of programs and
policies with a "top-down" resource-cetiing6 (Houerou &
Tatiercio, 2002). Such exercises that provide a basis to
(re)structure the expenditure process so that it "is driven by
policy priorities but disciplined by budget realities" (World
Bank, 1998) are particularly productive in developing
countries characterised by less-than-effective decisionmaking processes and a lack of fiscal discipline, which is why
many experience wide disparities in what has been promised
and what is realisticaUy affordable because their policies,
plans, and budgets are often largely disconnected.7
There are three main parts to this essay. The first lays out a
framework for understanding the notion of the "MTEF pre-
budget exercise" - that is, the functions, capabilities, and
grounds for such a fiscal mechanism. This framework wUl
explain why, in most developing countries, there is a need to
restructure expenditure planning in this way as opposed to
the traditional yearly budget cycles. The second part looks at
5 The World Bank (WB) is the foremost researcher and advocate of
the MTEF. They are particularly focused on developing countries in
Africa. However, the Asian Development Bank (ADB) and the
International Monetary Fund (IMF) has also advocated this exercise,
albeit with lesser intensity.
6 Also referred to as a top-down "resource envelope."
7 It is important to note here that the medium-term expenditure
framework is but one step in the overall process of public
expenditure management. The medium-term fiscal framework
(MTFF) is the first, but typically consists of only a statement of
objectives, and a set of integrated fiscal targets and projections. The
second, medium-term budget framework (MTBF), seeks to develop
medium-term budget estimates for every spending agency. Its
objective is to allocate resources to the country's strategic priorities
and ensure that these allocations are consistent with the overall
fiscal objectives. This is not addressed here since our concern is of
distributional efficiency (processes) and not of resource allocation
(ends).
115
 Journal of Bhutan Studies
the issues in implementation, particularly how such an
expenditure policy can be translated into an effective
instrument for poverty alleviation. These issues sharply limit
the successful adoption and implementation of this pre-
budget exercise. The final part draws upon the experiences of
countries that have instituted such processes, and presents
some qualitative (and quantitative) evidence that, in
developing nations, the patterns of benefit from pre-budget
planning progressively favour the poor.
The Pre-budget exercise
When the expenditure policies of governments fati to deliver
services or redistribute income to the poor, a good place to
start looking for the underlying problem is almost always how
the government spends its money.8 The budget is a critical
link to understanding if the shortcomings arise from (among
many other factors that are not discussed here) the
unsustarnabtiity of programs because policy-makers and
politicians promised more than is affordable, i.e. there is a
mismatch between bottom-up "needs" and top-down resource
"availability." Or, because funds are misallocated between
varying phases and needs of a program resulting from a lack
of coherent multi-year agenda of policies, plans, and budgets.
The medium-term expenditure framework approach,
therefore, complements the standard budget process because
it integrates the policy and planning stages with the
budgeting and allocation stages. But most importantly, it
provides a platform for harmonising priority-driven
expenditure programs with scarce resources over a medium-
term of three or five years.9 How the MTEF achieves this, is
outlined in the following paragraphs.
A typical budgeting practice in most developing countries is
performed on an annual basis. The restrictive time-frames of
8 See, World Bank. (2003). World Development Report 2004: Making
Services Work for Poor People. Washington, D.C. IBRD, p.181.
9 See Figure 1. The MTEF Process in the Appendices Section.
116
 A Pre-Budget Exercise
these yearly budgets mean that events out of a plan period,
e.g. macro-economic realities, expected future revenues (or
deficits), and the long-term requirements of programs and
government spending policies, are not thoroughly accounted
for across or even within fiscal years. This is aggravated by
weak monitoring and evaluation capacities. The MTEF, as a
corrective measure, is a roUing pre-budget exercise in that,
the first year's estimates becomes the basis for the
subsequent year's budget and so on, after accounting for
economic changes and policies. This aspect aUows for a
degree of monitoring and relatively smoother integration of
policies, plans and budgets across financial years.
However, the real value that the MTEF adds to a traditional
budget process in poorer countries arise from its capacity to
verticaUy integrate and match the top-down resource
envelope with bottom-up costs of programs and policies in a
multiyear framework. i° SpecificaUy, after a government has
developed its medium-term growth strategy, the respective
finance ministries! i determine and forecast its revenue
inflows over the next three or five years (whichever is
relevant). At the same time, preliminary budget caUs are also
issued to the various spending agencies. The review of the
country's financial position is then relayed as a resource
cetiing to the government and its agencies as a basis for
estimating and adjusting their sectoral spending.
The balancing of agencies' spending within a manageable
resource cetiing so that revenues and costs remain
sustainable and consistent with medium-term projections is,
therefore, a key strength of this fiscal exercise. It factiitates
greater macro-economic balance, improved sectoral
allocations, greater budget predictability for agencies, and,
generally, a more efficient use of public money. In addition, it
10 See Figure 2. The MTEF "Top-down" - "Bottom-up" Link in the
Appendices Section
n And, consequently, the respective budget departments or accounts
departments.
117
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also aUeviates some of the shortcomings endemic to
developing countries that were highlighted above.
For example, it is often the case that poor countries are
characterised by weak institutional capacities and a lack of
political plurality. As such, pro-poor priorities such as health,
education, and welfare are often subject to not only
inefficient, but also insufficient resources. The national
budget, however, experiences baUooning increases in other
expenditure such as payroU and contracts. This is indicative
of structural decay and corruption. In the traditional budget
system, there are relatively fewer controls for such increases
in spending. And the prioritisation and allocation of
resources, for good or bad, remains largely, a political affair.
The MTEF is a practical mechanism for not only fiscaUy
disciplining the unrealistic promises of elected officials in
such disabling conditions, but also to some extent, sheltering
pro-poor budgetary commitments from the vagaries of
changing governments and politicians.
The consequences of institutional weaknesses are also
manifest in the international commitments of developing
countries. The need for investment in capital projects (and
current expenditures) to drive long-term growth, generally
leads most to seek additional resources from external
multilateral and bilateral sources.!2 But^ tlie limitations of
their fiscal plans and processes (let alone other prevalent
shortcomings), caU to question the efficiency with which these
monies are directed to development efforts and, also, the
borrowers' credibtiity in servicing these debts. It is not by
chance that forty-one of the poorest countries in the world are
also the most highly indebted. 13 The MTEF is, therefore, not
12 These are funds to fill in a country's "financing gaps", which is the
difference between government expenditure (capital and current)
funded from its own coffers and total expenditure funded by
domestic plus international commitments. It is often made up of aid,
grants, and other borrowings.
13 See International Development Association (IDA) and International
Monetary  Fund   (2007).   "Heavily  Indebted  Poor  Countries   (HIPC)
118
 A Pre-Budget Exercise
only a pre-budget fiscal tool to demarcate and aUocate scarce
resources to strategic priorities without infringing on the
government and its agencies' spending priorities, but also a
safeguard against compromising the country's international
credit-worthiness. These are some of the primary reasons why
a pre-budget MTEF exercise is valuable as a complementary
segment to the traditional budget process in developing
countries. It separates strategic commitments to poverty
alleviation from the electoral concerns of weak political and
bureaucratic institutions by managing resources and
expenditures; controUing unsustainable and erratic
borrowing; and fixing targets on broad indicators of fiscal
performance such as primary deficit, resource mobilisation,
and total investment expenditure. In procedural terms, it also
puts national budget processes on a planned and sustainable
path towards utilising public monies effectively in delivering
services to the poor year after year.
Issues in implementation
The conceptual strength of the medium-term expenditure
framework is broadly acknowledged. There are concerns,
however, about the issues involved in moving this exercise
from the theoretical to the operational arena. Weak
institutional capacities and a lack of efficient policies and
plans hinder the operation of programs which aid the flow of
benefits to the most disadvantaged sections of societies in
developing countries. In addition, experiences in Africa!4 have
shown that the implementation of MTEF reforms are impeded
by the fact that: 1) basic foundations of budget and public
expenditure management in developing countries are very
weak;   2)   donor  demands  for  complex  and   comprehensive
Initiative and Multilateral Debt Relief Initiative (MDRI) - Status of
Implementation", p. 3. This figure includes: 22 countries that qualify
for irrevocable debt relief; 9 countries that qualify for debt
assistance; and 10 countries that are potentially eligible and may
wish to avail themselves under the enhanced HIPC Initiative.
14 See, World Bank. (1998). Public Expenditure Management
Handbook. Washington D.C. IBRD, p.39.
119
 Journal of Bhutan Studies
reforms far outpace host-country's implementation capacities;
3) other institutional support-apparatus to complement
budget reforms are also weak; 4) tine ministries often have
tittle time, information, and incentive to submit to reforms
dictated by the finance ministry; and 5) fiscal reforms are
often focused only on technical issues and exclude political
and institutional considerations. In tine with the objectives of
this paper, these issues will be addressed as part of a broader
inquiry about possible roadmaps for such reforms; and why
political and bureaucratic interests are important for a
successful implementation of the MTEF as a development
tool.
First, the implementation process can emulate the ideals of
the MTEF itself. Where the pre-budget exercise seeks to
match needs and availabUity, its implementation can benefit
from matching the aspirations of donors (and governments)
with the capacities of the budget and other institutional
support-apparatus of the host country. This practical
grounding keeps expectations in check whtie identifying areas
that need reinforcement. It also strengthens the idea that the
MTEF alone cannot deliver efficient and effective public
expenditure management, but that "it is only a complement
to (and not a substitute for) basic budget management"
(Houerou & Taliercio, 2002). It needs the support of other
institutional mechanisms.
These are important considerations in "sequencing"
budgetary reforms, so that implementation is introduced
either horizontaUy by "pUoting", i.e. graduaUy widening its
scope across sectors from high-priorities such as health,
education, and welfare!5 ^0 low-priorities such as subsidies,
tax-breaks, and luxury goods imports; or, verticaUy by
"phasing" 16 across MTEF levels - aggregate, sectoral, service
is   See   Houerou,   P.   L.   &   Taliercio,   R.    (2002).   "Medium-Term
Expenditure  Frameworks:   From  Concept  to  Practice.   Preliminary
Lessons from Africa," Africa Region Working Paper Series, 28, p. 26.
16 For more on the concepts of MTEF "phasing" and "piloting" see,
Houerou, P.  L. & Taliercio, R.  (2002). "Medium-Term Expenditure
120
 A Pre-Budget Exercise
delivery (as shown in Figure 2) - on a government-wide basis.
Houerou and Taliercio (2002) add that implementation can
also be carried out using both pilots and phase-ins by
"operating in a limited number of sectors (horizontaUy) and
levels (vertically)." There is no exact specification as to which
sequence is better. But the decision to implement MTEF
reform as a pilot, phase-in, or a mixed approach based on a
match of donor demands and host country's capacities and
basic public expenditure management conditions, is an
important basis for an effective and efficient budget process
that yields tangible gains. The recognition of such gains is
then crucial to the successful adoption of fiscal reforms in
developing countries.
Secondly, even a well-specified and productive fiscal process
is not always successfully adopted. It is often observed that
while a reform process demonstrates the capacity to trickle
resources to appropriate redistributive priorities and debt-
servicing plans, there is little political and bureaucratic "wiU"
to support these reforms. These conditions render MTEF
reforms "toothless" at best. Two sets of incentives need to be
addressed here: 1) the incentives for politicians and 2)
bureaucratic incentives of central and sectoral ministries to
participate in budget reform and implementation. In
developing countries where constituency expectations are
high, elected officials are likely to promise more than can be
feasibly delivered. A budget envelope restricts such discretion,
making it undesirable to many politicians. A failure to
appreciate the nature of MTEF, which seeks to fiscaUy
discipline and prioritise the country's long-term development
goals within its limited means, also lead most politicians with
short-term objectives in mind, to veto it.
Similarly, the bureaucratic incentives for central and sectoral
ministries need to be specificaUy addressed if they are to
contribute  unequivocaUy  to  the  process.   Like  many  other
Frameworks:  From Concept to Practice:  Preliminary Lessons from
Africa," Africa Region Working Paper Series, 28, p. 28.
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 Journal of Bhutan Studies
reforms, the MTEF creates winners and losers. Therefore, if
the costs and benefits of reforms are not at least accurately
estimated, it is not only non-priority sectors (losers) who
stand to give up the most that wiU reject them, but also
priority sectors (winners) who wiU disregard the credibility of
the reform's promised benefits.
There are preventive measures to political influences and
bureaucratic non-compliance however. One noteworthy
proposal is that the preparation of the MTEF should involve
broad consultative processes. If results are viewed to be
productive and legitimate, legislative and public pressure may
dissuade political executives from straying too fari7 from the
development strategy and pro-poor commitments of the
MTEF. For bureaucratic agencies, positive incentives such as
flexibility and autonomy in determining their own spending
priorities within their resource envelope wiU enhance their
participation.
Therefore, the recognition and attention to issues of
sequencing and incentives in the implementation of budget
reforms, is a key step towards creating a broad consensus
that fiscal tools such as the MTEF enhance the effectiveness
and efficiency of budget systems in sustaining the delivery of
public goods and services to the poor.
Experience and evidence
But do MTEFs really deliver on its promises? And what are its
implications for the poor in developing nations? To answer
these questions, I draw from a preliminary comparison of
fiscal reforms in the Africa region by Phtiippe Houerou and
Robert Taliercio (2002) for the World Bank. Their study
includes nine countries, among which two (South Africa and
Uganda) have instituted comprehensive MTEF reforms; three
(Kenya, Tanzania, and Ghana) are in the intermediate stages;
17 See Houerou, P. L. & Taliercio, R. (2002). "Medium-Term
Expenditure Frameworks: From Concept to Practice: Preliminary
Lessons from Africa", Africa Region Working Paper Series, 28, p. 34.
122
 A Pre-Budget Exercise
and four (Mozambique, Malawi, Rwanda, and Guinea) are in
the basic stages of implementation.
There are some limitations to the study. First, the assessment
is limited by the lack of data produced in these countries, i8
Second, quantitative analysis of MTEF reforms is restricted to
just three cases - South Africa, Uganda and Tanzania, who
were included only because of the availability of data. A
question of selection bias arises here. Third, the qualitative
analyses of the first five countries!9 j^ fae group are based
strictly on donor documents such as internal World Bank
memos and perspectives of country-economists. The picture
of the progress of reforms in these countries is incomplete.
And fourth, the lack of data has also meant that only a
subset of outcome indicators is analysed. These are macro-
economic/fiscal balance, resource aUocation, and budgetary
predictabtiity.20 The evidence of efficiency in the use of public
funds after MTEF reforms, which is of interest to this paper,
is not presented.
Despite these limitations, important inferences can be drawn
from the conclusions of Houerou and Taliercio to support our
theory that MTEF reforms are catalysts for enhancing
commitments and spending on pro-poor priorities in
developing countries. The analysis of trends in resource
allocation in Africa, specificaUy government expenditure on
priorities such as health, education, and welfare in the pre-
MTEF versus post-MTEF period, provides some proof of this.
Some of the systematic benefits that accrue from
implementing MTEF pre-budget reforms are discussed below.
One of the objectives of MTEF reforms is fiscal discipline. I
18 The authors acknowledge the lack of data as a primary limitation
to their study as well. See p. 16.
19 Houerou & Taliercio (2002) include only the first five countries in
their qualitative analysis because of a lack of regular expenditure
reports in the latter four countries. They are only in the basic stages
of implementing the medium-term expenditure framework.
2° See Houerou & Taliercio (2002), p. 17.
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 Journal of Bhutan Studies
have emphasised that the mechanism would regulate not only
the activities of domestic spending agencies and actors, but
also country activities in the international arena. In Houerou
and Taliercio's study, a country's fiscal deficit (revenues
minus expenditures) is used as the proxy indicator for fiscal
discipline. The authors find no evidence to support the
hypothesis that fiscal reforms are correlated with improved
national fiscal discipline. Uganda, South Africa, Ghana and
Tanzania aU record minimal to no reduction in fiscal deficits
(as a percentage of Gross Domestic Product) over the period
1985 to 2000 during which the MTEF was implemented.2!
The authors, however, state that their analysis is simplistic
and does not take into account various causal factors (e.g.
macro-economic shocks, adjustment, and fluctuations in debt
payment), which weaken the explanatory power of their
results. In terms of the fiscal behavior of elected officials, the
study does find some subjective evidence that MTEFs lead to
more accountabtiity. In Kenya, South Africa and Tanzania,
where MTEF formulation is based on public hearings, civti
society representation, and other consultative meeting
processes, it has, by some accounts, led to budget
appropriations based more on "professional criteria than on
political calculations" (Houerou & Taliercio, 2002). This
positive result for accountability is a valuable reinforcement
to fiscal reforms.
Furthermore, there is little evidence to support the
proposition that MTEF reforms lead to budget predictability.
Houerou and Taliercio use the absolute difference between
the approved budget and executed budget expressed as a
2i There are studies, however, with results that are contrary to
Houerou and Taliercio's conclusions. In fact, they (Houerou &
Taliercio) note that authors like Allister Moon, whose study (1997) of
"Uganda's Budget Framework" and David Bevan and Geremia
Palomba's (2002) "The Ugandan Budget and Medium Term
Expenditure Framework Set in a Wider Context", argue that MTEFs
have been successful in achieving macro-economic stability and that
expenditures were matched to revenues in order to manage fiscal
deficits.
124
 A Pre-Budget Exercise
percentage of the approved budget22 in any given year to
analyse this outcome. In the two cases of Uganda and
Tanzania used in their analysis, there is no significant
relationship between fiscal reforms and budget predictability
even for priority sectors. In fact, as the authors emphasise,
there is considerable difference between budget formulation
and execution in these countries. As I have noted, this is
detrimental to the credibility of the reform because it may
lead winners or the priority sectors (let alone the losers or
non-priority sectors), to disregard and ultimately reject the
benefits espoused by the MTEF. However, it is important to
note here that these results only hold for a limited number of
years given that MTEF implementation in most African
countries is stiU in the preliminary stages. At this point, it is
simply difficult to clearly associate the results of MTEF
reforms with its objectives of macro-economic stability,
political accountabtiity, budget predictabtiity, and the overall
effectiveness of the MTEF process.
On a more positive note, there are encouraging findings in
terms of resource aUocation. Houerou and Taliercio find that
budgetary reforms are associated with the (re) aUocation of
resources to government priorities. I use this as a justification
for the hypothesis that, in the countries who have instituted
MTEF reforms, there is a positive tendency towards pro-poor
commitments and spending as indicated by a comparison of
the overall health, education, social services, and welfare
expenditures in Uganda and South Africa23 before and after
reforms.
The real annual change in sectoral spending in Uganda in
Table 1 shows that MTEF reform outcomes are most
prominent for pro-poor priorities such as education and
health. In education, we see an increasing real annual change
from -0.06 percent in 1994/95 to 0.36 percent in 1995/96,
22 This method is known as the "Budget Deviation Index" (BDI).
23 See Table  3.   Sectoral  Expenditures  of Uganda;   and Table  4.
Sectoral Expenditures of South Africa in the Appendices Section.
125
 Journal of Bhutan Studies
0.15 percent in 1996/97, and 0.23 percent in 1997/98.
Houerou and Taliercio note that education sector spending
grew from 19.8% of total expenditures in 1994/95 to 26.9%
in 1997/98.24 In terms of health, the aUocations increase, but
remain inconsistent from year to year. This is true for
expenditure in other pro-poor programs such as social
services and agriculture.
The South African story is significantly better in associating
MTEF reforms with not only increased sectoral spending for
pro-poor priorities, but also in showing that government
spending is graduaUy reaUocated from non-priority sectors to
priority sectors (Table 3). Table 2 shows that - as a share of
total actual expenditure - education receives the largest and
most persistent government commitment and spending. This
is also true of spending on education as a percentage of total
MTEF expenditures. Other priorities such as health, welfare,
and justice increase their share of total expenditures
marginaUy from 1997 to 1998 as well. In terms of reaUocation
of resources, we see marginal decreases in South Africa's
defense spending as a percentage of total expenditures (Table
2) as well as a percentage of total MTEF expenditures (Table
3). This would - to some degree - explain the affordabUity of
increases in spending for the priority sectors.
Conclusion
Therefore the limited quantitative evidence from Houerou and
Taliercio's preliminary analysis of MTEF reforms in Africa
suggests that budgetary reforms are correlated with some
levels of sectoral (re) allocation to top priority sectors such as
education, health, welfare, and social services. This does not
mean that all government expenditure is allocated or reallocated to priorities, or even that, the prescriptions of the
24 These figures are not presented in Table 1 in the Appendices
Section. Houerou and Taliercio present these numbers based on the
findings of other studies cited in their paper. They also note that
"total expenditure" refers to only recurrent expenditure and capital
expenditure financed by the African country government itself.
126
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MTEF are used in practice. There are trade-offs which are
unique to individual cases. For example, in the three
countries that have implemented the MTEF comprehensively,
Uganda prioritises and aUocates to the education sector;
South Africa to health and justice; and Tanzania to social
services. Further research using a wider sample of countries
over a number of years will help shed more tight on the
significance of relationships (if any) between budget reforms
and priority sector spending.
For now, it can be inferred from the preliminary evidence
presented by the World Bank authors that the encouraging
spending trends in the areas of health, education, welfare,
and social services, which have generally been positively
correlated with economic growth and poverty alleviation in
most developing countries confirms - in some measure - the
proposal of this paper, which is that, pre-budget exercises
such as the MTEF progressively favour expenditures on pro-
poor programs, and, therefore, the poor.
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the Operationalisation of a Medium Term Expenditure
Framework (MTEF)." Harvard University: Center for
International Development (CID). Retrieved April 11,
2008, from
http: / /www.cid.harvard.edu/archive/india/pdfs/expendit
ure ramakrishnan0400.pdf.
Royal Government of Bhutan & the United Nations
Development Program - Bhutan (2004). Medium Term
Expenditure Framework as a Pro-poor Development Tool -
Implications and Basic Guidelines for the DBA. Thimphu,
Bhutan.
Royal Government of Bhutan (2004). Bhutan: Medium Term
Expenditure Framework Note. Prepared as Part of the
Bhutan Public Expenditure Management Workshop.
August 16 - 20. Thimphu, Bhutan. Retrieved Aprti 3,
2008 from
http: / /wwwl ■worldbank.org/publicsector/pe/Bhutan%20
Workshop / za. doc
Short, J (2003). "Country Case Study 4: Assessment of the
128
 A Pre-Budget Exercise
MTEF in Ghana." Overseas Development Institute (ODI):
Office of Aid & Public Expenditure. Retrieved April 4,
2008, from
http: / / wwwodi.org.uk/PPPG/CAPE/pubtications/MTEF-
Ghana.pdf
World     Bank     (1998).     Public    Expenditure    Management
Handbook. Washington, D.C: The International Bank for
Reconstruction and Development. Retrieved Aprti 6, 2008
from
http: / /wwwl ■worldbank.org/publicsector/pe/handbook/
pem98.pdf
 .    (2003)    World   Development   Report   2004:   Making
Services Work for Poor People. Washington, D.C: The
International Bank for Reconstruction and Development
(IBRD). Retrieved Aprti 4, 2008 from http: / / www-
wds. worldbank. org/ external / default / WDSContentServer /1W3
P/IB/2003/10/07/000090341 20031007150121/Rendered/
PDF/268950PAPER0WDR02004.pdf
129
 Journal of Bhutan Studies
Appendix
Figure 1. The MTEF Process
i
Set fiscal
Total
	
Review
previous
targets &	
► expendit -
*■ „    +_      ,      —Annual
programs/
policies         .
-ure
ceiling         i
estimate
for multi-
years
.    (next
periods
estimate
for
multi-
year's)
budget
formulat
Macro-
economic
years
-ion
forecasting
Update
New
cost
sectoral
estimate
demand
of
for
Sectoral
existing
remainin
Budget
program
-g years
in
medium-
term
Planning
Adapted from:
PEMHandbool
c (World Ban
k,
1998: 32) & "MTEF/Top-
Down Budgetir
lg" (Kim: 2004)
130
 A Pre-Budget Exercise
Figure 2. The MTEF "top-down" - "bottom-up"
link	
Macro-economic Framework
i
Medium-term Fiscal Targets
Aggregate Expenditure Limit
MTEF Framework
Sectoral Spending Demands
Sectoral Spending Plans
Sectoral Spending Policies
Source: Medium-Term Expenditure Framework as a
Pro-poor Development Tool - Implications and Basic
Guidelines for the DBA. (Royal Government of
Bhutan & the UNDP, 2004: p. 12)
Table 1. Sectoral Expenditures:
in%)
Uganda (Real Annual
Change
Sector
FY94/95
FY95/96
FY96/97
FY97/98
1
Health
0.22
-0.15
-0.11
0.20
2
Education
Economic
-0.06
0.36
0.15
0.23
3
Functions &
Social Services.
-0.31
0.22
-0.30
0.03
4
Agriculture
-0.42
0.07
-0.19
0.01
5
Roads & Works
-0.01
0.82
-0.30
0.50
6
Security
-0.05
0.14
-0.22
0.60
7
Law & Order
0.09
0.04
0.00
-0.04
Source: Houerou & Ta!
liercio (2002:
:p.l9)
131
 Journal of Bhutan Studies
Table 2. Sectoral Expenditures: South Africa
(As a Percentage of Total Actual Expenditures)
Sector
1997/1998
1998/1999
1999/2000
1
Health
14.4%
14.5%
14.8%
2
Education
28.2%
27.9%
28.0%
3
Welfare
11.3%
11.4%
11.7%
4
Economic
6.6%
7.0%
5.9%
5
Infrastructure
14.6%
14.8%
12.8%
6
Justice
11.7%
13.0%
13.5%
7
Defense
7.5%
7.1%
6.4%
Source: Houerou & Talierci
o (2002:
p.20)
Table 3. Sectoral Expenditures: South Africa
(As a Percentage of Total MTEF Expenditures, 1999/2000)
Sector
1
Health
2
Education
3
Welfare
4
Economic
5
Infrastructure
6
Justice
7
Defense
MTEF
(1998)
Budget
Actual
Outcome
14.5%
14.8%
14.8%
28.6%
27.5%
28.0%
11.7%
11.5%
11.7%
5.5%
6.6%
5.9%
13.8%
12.3%
12.8%
13.1%
13.0%
13.5%
6.7%
6.6%
6.4%
Source: Houerou & Taliercio (2002: p.20)
132
 Vol.1    No.l Winter 1999
Contents
Father Estevao Cacella's Report on Bhutan in 1627
Luiza Maria Bailie
Gyaltse Tenzin Rabgye and the Founding of Taktsang Lhakhang
John A. Ardussi
The Rapprochement between Bhutan and Tibet under the
Enlightened Rule of rDe-srid XIII Shes-rab-dbangphyug (r. 1774-
63)
John A. Ardussi
Coinage in Bhutan
Nicholas Rhodes
Bhutan: Political Reform in Buddhist Monarchy
Theirry Mathou
133
 Vol.2 No.l        Summer 2000
Contents
The House of 'Obs-Mtsho - The  History of Bhutanese Gentry
Family from the 13th to the 20th Century.
John A. Ardussi
Ancient Trade Partners: Bhutan, Cooch Bihar and Assam (17th -
19th Century)
Francoise Pommaret
Change in the Land Use System in Bhutan:  Ecology,  History,
Culture and Power
Tashi Wangchuk
Economy of Yak Herders
Pema Gyamtsho
A Brief History of Tango Monastery
Tshenyid Lopen Kuenleg
Consecration   Ceremony   of   Ka-Gong   Phursum   Lhakhang   in
Kurjey, Bumthang by His Holiness Dilgo Khentse Rinpoche
Anonymous
134
 Vol.2 No.2 Winter 2000
Contents
Dorji Lingpa and His Rediscovery of the "Golden Needle" in
Bhutan
Samten G. Karmay
Population and Governance in the mid-18th Century, as Revealed
in the Enthronement Record of Thugs-sprul Jigs med grags pa I
(1725-61)
John Ardussi and Karma Ura
The Monetisation of Bhutan
Nicholas Rhodes
On the Two Ways of Learning in Bhutan
Karma Phuntsho
Recent Bhutanese Scholarship in History and Anthropology
Francoise Pommaret
From Living to Propelling Monuments:  the Monastery-Fortress
(rdzong) as Vehicle of Cultural Transfer in Contemporary Bhutan
Marc Dujardin
Signs of the Degenerating Age: The Desecration of Chorten and
Lhakhang in Bhutan
Richard Whitecross
Continuing Customs of Negotiation and Contestation in Bhutan
Adam Pain and Deki Pema
The Politics of Bhutan: Change in Continuity
Thierry Mathou
135
 Vol.3 No.l Summer 2001
Content
Local   Resource   Management   Institutions:   A   Case   Study   on
Sokshing Management
Sangay Wangchuk
Sustaining   Conservation   Finance:   Future   Directions   for  The
Bhutan Trust Fund for Environmental Conservation
Tobgay S. Namgyal
Sustainability of Tourism in Bhutan
Tandi Dorji
Ensuring Social Sustainability: Can Bhutan's Education System
Ensure Intergenerational Transmission of Values
Tashi Wangyal
The Attributes and Values of Folk and Popular Songs
Sonam Kinga
Mass   Media:   Its   Consumption   and   Impact   on   Residents   of
Thimphu and Rural Areas
Phuntsho Rapten
Bhutanese Context of Civil Society
Karma Galay
136
 Vol.5 Winter  2001
Contents
His   Holiness   the    13th   Dalai   Lama   and   Bhutan   House   in
Kalimpong
Her Majesty the Queen Mother, Ashi Kesang Choeden
Wangchuck
On Bhutanese and Tibetan Dzongs
Ingun Brunskeland Amundsen
Guide to Chari  Monastery - A  Brief History of Chari Vajraya
Monastery
His Holiness Nawang Tenzin
History of Has (Ha) Valley
Pema Tshewang
Guide to Chang Gangkha Monastery
Pema Tshewang
The Hidden Valley - Langdraney
Lhundup
Publications  in  Bhutan  since  the  Establishment  of the  ISBN
Agency
Sonam Kinga
Patag-The Symbol of Heroes
Phuntsho Rapten
Perceptions of Security
Karma Ura
137
 Vol. 6 Summer    2002
Contents
A Brief History of Rigsum Goenpo Lhakhang and Choeten Kora
in Trashi Yangtse
Lam Kezang Chhophel
Folktale Narration: A Retreating Tradition
Tandin Dorji
Integral  Development:  Taking the  Middle  Path  towards  Gross
National Happiness
Sean Boyd Frye Hargens
The Legal Status of the Internet: Are there Lessons to be learnt
from Domain Names and Trade Marks Disputes?
Lungten Dubgyur
138
 Vol.7 Winter  2002
Contents
The Herdsmen's Dilemma
Karma Ura
Grazing Management of Temperate Grasslands and Fallows
Walter Roder
Grazing  Management  in  National  Parks  and  Protected Areas:
Science, Socio-economics and Legislation (Tenure)
Sangay Wangchuk
Condition   and   Potential   for   Improvement   of   High   Altitude
Rangelands
Pema Gyamtsho
Grazing Management in Broadleaf Forests
Lungten Norbu
139
 Vol.8 Summer  2003
Contents
The Founding of Dungsam Yongla Riwo Pelbar Dargye Chholing
and the List of Successive Lamas
Contributed by Her Majesty the Queen Mother of Bhutan,
Ashi Kesang Choeden Wangchuck
The First Meeting of the King Ugyen Wangchuck with Raja Ugyen
Dorji in Kurjey Lhakhang
Contributed by Her Majesty the Queen Mother of Bhutan,
Ashi Kesang Choeden Wangchuck
The Tradition of Betel and Areca in Bhutan
Francoise Pommaret
A Language for Rules, Another for Symbols: Linguistic Pluralism
and Interpretation of Statutes in the Kingdom of Bhutan
Alessandro Simoni
A Provisional Physiographic Zonation of Bhutan
Chencho Norbu et al
Types of Land Degradation in Bhutan
Chencho Norbu et al
An Analysis of Pegged Exchange Rate Regime Between Bhutan
and India
Karma Galay
140
 Vol. 9 Winter  2003
Contents
Finding   Happiness   in   Wisdom   and   Compassion   -  The   Real
Challenge for and Alternative Development Strategy
Dr. Ross McDonald
Trade, Development, and the Broken Promise of
Interdependence: A Buddhist Reflection on the Possibility of
Post-Market Economics
Peter D. Hershock
Cherry Picking in Bhutan
Michael Rowbotham
Putting Gross National Happiness in the Service of
Good Development
Johannes Hirata
Bhutan's Quadrilemma: To Join or Not to Join the WTO, that is
the Question
Mark Mancall
141
 Volume 10 Summer  2004
Contents
The   Symbolic   and   Functional   Significance   of   the   Chhoetse
Penlop: A Tribute to the Sixteenth Chhoetse Penlop
Sonam Kinga
A Historical Background of the Chhoetse Penlop
Dorji Wangdi
Demise of Tongphu Gyalpo
Karma Galay
Myth, Legend and History Surrounding Dungsam
Rinzin Wangchuk
The Myth and the Mystery of Aja Nye
Sonam Wangdi
Changing   Soil   Fertility   Management   in   Bhutan:   Effects   on
Practices, Nutrients Status and Sustainability
Chencho Norbu
Predator-Prey Dynamics: The Role of Predators in the Control of
Problem Species
Tashi Wangchuk
International Politics of Bhutan
Karma Galay
Bhutan's Security: Walking Between the Giants
Dorji Penjore
142
 Volume 11 Winter  2004
Contents
A 17th Century Stone Inscription from Ura Village
John Ardussi
Formation of the State of Bhutan  ('Brug gzhung)  in the   17th
Century and its Tibetan Antecedents
John Ardussi
Poverty Alleviation: A Buddhist Perspective
Peter D. Hershock
Television, Materialism and Culture: An Exploration of Imported
Media and its Implications for GNH
Dr Ross McDonald
Bhutanese Public Policy in the 'Century of interdependence'
Peter D Hershock
Indo-Bhutan Relations: Recent Trends
Tashi Choden
H.H. Khenpo Jigme Phuntsho: A Tribute and a Translation
Karma Phuntsho
143
  Volume 12 Summer  2005
Contents
How   should   Happiness   guide   policy?   Why   Gross   National
Happiness is not opposed to democracy
Johannes Hirata
Towards a New Conceptualization of Gross National Happiness
and its Foundations
Dr. Ross McDonald
Folktales and Education: Role of Bhutanese Folktales in Value
Transmission
Dorji Penjore
The  Positive  Impact  of Gomchen Tradition  on  Achieving  and
Maintaining Gross National Happiness
Khenpo Phuntsho Tashi
The Buddhist Truth of Happiness: Spirituality and Development
- the case of governance in Bhutan
Diederik Prakke
113
 Volume 13 Winter  2005
Contents
Restructuring  19th Century Trade Route Between Bhutan and
Assam: Evidences from British Political Missions
Indrajit Ray and Ratna Sarkar
The Historical Anecdote of Kheng Nobilities
Lham Dorji
Oral Construction of Exile Life and Times of Kunkhyen Longchen
Rabjam in Bumthang
Dorji Penjore
Religious Life and History of the Emanated Heart-son Thukse
Dawa Gyeltshen
Lham Dorji
Cattle   Management  Systems   in   Humid   Sub-tropical  Areas   of
Western Bhutan
N.B. Tamang and J.M. Perkins
114
 Volume 14 Summer  2006
Contents
Keynote Address
Sudhir Vyas
Media in Bhutan: Now and Then
Kinley Dorji
Stone Inscriptions: An Early Written Medium in Bhutan and its
Public Uses
John Ardussi
Dances in Bhutan: A Traditional Medium of Information
Frangoise Pommaret
Roar of the Thunder Dragon: The Bhutanese Audio-visual
Industry and the Shaping and Representation of Contemporary
Culture
Tshewang Dendup
Selling Desire and Dissatisfaction: Why Advertising Should be
Banned from Bhutanese Television
Ross McDonald
Media, Markets and Meaning: Placing Sustainable Development
and Environmental Conservation and Enrichment at Risk
Peter D. Hershock
Role of Kuensel in Fostering Democracy in Bhutan
Sanjeev Mehta
115
 Volume 15 Winter  2006
Contents
Post-Zhabdrung Era Migration of Kurmedkha Speaking People in
Eastern Bhutan
Tshering Gyeltshen
A Cheerless Change: Bhutan Dooars to British Dooars
Dr. Sonam B. Wangyal
Two Nineteenth Century Trade Routes in the Eastern Himalayas:
The Bhutanese Trade with Tibet and Bengal
Ratna Sarkar and Indrajit Ray
An Analysis of "Meme Haylay Haylay and His Turquoise" using
Joseph Campbell's model of the Hero's Journey
A. Steven Evans
Echoes of Folksongs in Bhutanese Literature in English
Chandra Shekhar Sharma
Preserving the Consciousness of a Nation: Promoting "Gross
National Happiness" in Bhutan Through Her Rich Oral
Traditions
A. Steven Evans
116
 Volume 16 Summer  2007
Contents
The Making of a Bhutanese Buddha: Preliminary Remarks on the
Biography of Tenzin Gyatso, a Bhutanese Scholar-Yogi
Amy Holmes
Inter-Regional Variations in the Inequality and Poverty in Bhutan
Sanjeev Mehta
Reflections on Conservation Education and Practice in Bhutan
Stephen F. Siebert and Jill M. Belsky
Historical Roots, Spiritual Significance, and the Health Benefits
of mKhempa-Uong gNyes Tshachu (hot spring) in Lhuntshe
Phurpa Wangchuk and Yeshi Dorji
Effect of TRIPS on Pricing, Affordability and Access to Essential
Medicines in Bhutan
Dr. Tandin Dorji
117