Thailand’s Medium Term Expenditure Framework (MTEF)

1. Thailand’s Medium Term Expenditure Framework(MTEF) The Bureau of the Budget Office of Prime Minister Royal Thai Government

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

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

4. 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

5. 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

6. Fiscal Sustainability Assumptions Results from the Processing Modules Macro-Framework Expenditure & Revenue Endogenous Inputs Stock of Public Debt Fiscal SustainabilityAssessments

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

8. 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

9. 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

10. Key Figures

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

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

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

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

15. Revolving Funds Health fund Student Loan Revolving Fund

16. Universal Health Care

17. Funds

18. Local Authorities Self Collected Subsidy from the Budget Government Collected Revenue Sharing Gov’t Revenue L/A Rev Previously 25.2%

19. Local Authority Revenues

20. Commitment Budget and outyears

21. Personnel Expenditure

22. Lessons Learned • To forecast the outyear budget (year 2-4) need both unit cost and output: lacking of quantitative indicators make the output forecast a difficult task. • Understanding of government agencies • The rolling MTEF make the forecast less important. • Dependence on external economy • Political Stability