Thailand’s Medium Term Expenditure Framework

1. Thailand’sMedium Term ExpenditureFramework The Bureau of the Budget The prime Minister’s of Office Royal Thai Government

2. Relationship of Government Agencies • Monetary Policy • Macroeconomic • Forecast Bank of Thailand • 5 yr national plan • 4 yr government Administrative Plan • Macroeconomic Forecast • Budget Policy • Budget Allocation • Revenue & Expenditure estimates • Monitoring & Evaluation BOB NESDB • Fiscal Policy • Revenue Estimates • Macroeconomic Forecast MOF • - 4 yr Plan • - Annual Plan • Budget Request Gov. Agencies

3. MTEF • 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?

4. SPBBS : The Principle Policy aspects Management aspects • Deconcentration • Management flexibility • Good governance • Financial disclosure • Top-down policy driven • Strategic allocation • Fiscal discipline • Effective budgeting • People oriented

5. Elements of SPBBS • Medium Term Expenditure Framework - MTEF • Result oriented • Strategic Target • Ministry Target • Output and KPI • Devolution • Comprehensiveness Good Governance • Monitoring and Evaluation

6. Implementation of SPBBS & MTEF SPBBS Implemented in 2001 MTEF Implemented in 2003

7. MEDIUM-TERM BUDGET PLANNING FRAMEWORK National Economic and Social Development Plan Government Policy Government Administrative Plan National Investment Plan MTEF (Top-Down) MTEF (Bottom-Up) Demand of Funds Supply of Funds Fiscal Policy Formulation Fiscal Rules Annual Budgeting Ceiling Macro-economic Outlook ANNUAL BUDGET PLANNING FRAMEWORK Budget Allocation Strategy Revenue Forecast Public Debt and Fiscal Risks Annual Budget Preparation

8. 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

9. MTEF Process (simplified) Macro-economic forecasting Fiscal target Total expenditure setting for multi-years Sectoral ceiling setting for multi-years Annual budget formulation Updated cost estimate of existing policy/program New sectoral demand for t+3 (priority/cost) Sectoral Budget Preparation

10. Macro Economic Assumption Source : Bureau of the Budget, Bank of Thailand, NESDB

11. Bureau of The Budget’sstrategy measurement Investment Tourism Infrastructure Social network Remaining Budgets (Fiscal Space) Education Public health To be accordance with human power improvement Commitment Expenditure The measurement of budget allocation is essential Minimum Investment Personnal Expenditure Fiscal Sustainability Framework Revolving Fund Local Authority Subsidy Loss from FIDF Government External Borrowing Project/Program Loan External Borrowing Internal Borrowing SOEs

12. Fiscal Sustainability Framework Remaining Budgets RemainingBudgets Remaining Budgets การลงทุนขั้นต่ำ การลงทุนขั้นต่ำ เงินเดือน/ค่าใช้จ่ายบุคลากร การลงทุนขั้นต่ำ Minimum Investment เงินเดือน/ค่าใช้จ่ายบุคลากร เงินเดือน/ค่าใช้จ่ายบุคลากร เงินอุดหนุน Personnel Expenditure เงินอุดหนุน เงินอุดหนุน กู้ใน Subsidy and Funds กู้ใน กู้ใน External Borrowing Internal Borrowing Remaining Budgets MTEF • Public Debt / GDP < 60% • Debt Service / Budget < 15% • Balance Budget 14 13 12 11

13. Key Figures

14. Revenue Module PIT Direct Tax CIT PTT TAX EXCISE VAT Indirect Tax Import Duty SBT

15. Domestic Borrowings Estimation SOEs domestic debt Domestic Borrowing Projection Govt domestic debt Total domestic debt

16. External Borrowings • Sensitivity Analysis on Interest Rate and Exchange Rate • Query Function • Exchange Rate Converting External Borrowing

17. External Borrowings Assume Disbursement Patterns : ADiPs 22 branch Data-base External Debt Disbursement Interest Payment Principle Payment

18. Lessons Learned 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

19. Q&A Website : www.bb.go.th E-mail address : panida@bb.go.th Thank you