A strategic (‘top-down’) component which sets the overall framework for the budget and leads to the setting of medium term ceilings for each line ministry at the start of the annual budget preparation process.
A line ministry (‘bottom-up’) component which reforms the budget preparation process within line ministries and helps build the capacity for line ministries to prepare and manage their budgets in a strategic way.
MTBF Process:
The MTBF involves preparation by line ministries of three year expenditure estimates within the ceilings provided by the Ministry of Finance (for the recurrent budget) and by the Planning Commission (for the development budget). Each year, the MTBF process involves the rolling forward of the previous MTBF estimate by one year and the addition of a new outer year. As shown in the figure below, the MTBF and annual budget are not two separate processes; the annual budget represents the first year of the MTBF.
Relationship between the annual budget and the MTBF process (where t = year):
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