Latvia's experience over the past decade shows that economic growth and real convergence can no longer be assumed to be exogenously driven processes determined by given technological improvements and relatively higher factor returns. Instead, it is an endogenously driven process led by many variables, including policy variables. European membership clearly brings enormous economic benefits to Latvia. However, it also brings important challenges on the macroeconomic front, especially prior to the adoption of the euro. Substantial progress has been made toward fiscal consolidation since the mid-1990s but several risks remain. Given the facts that domestic demand remains buoyant and that Latvia will have to accommodate the expenditure commitments associated with NATO and EU membership while simultaneously aiming to fulfill the medium-term goal of a balanced budget, a more prudent fiscal policy should be the main short-term policy objective. The authorities should therefore reassess their current medium-term budget framework and strengthen their fiscal rules so that off-budget spending is eliminated and controls over spending ministries and local government finances are reinforced. They should also rethink any further tax reductions until a clear strategy is designed for compensating for projected losses in government revenues. Monetary policy can contribute to sustainable growth and job creation in Latvia in the medium and long term by providing an environment for price stability. It will have to be complemented by further microeconomic reforms and prudent wage developments aligned with productivity growth. This paper - a product of the Poverty Reduction and Economic Management Sector Unit, Europe and Central Asia Region - is part of a larger effort in the region to contribute to macroeconomic analysis in the Baltic countries.

This Technical Assistance Report focuses on Botswana’s Medium-term Expenditure Framework (MTEF). The Government of Botswana has committed to introduce the MTEF by 2016. The MTEF will provide a more explicit linkage between National Development Plan priorities and budget allocations by adopting a medium-term budgeting horizon. An MTEF model based on a binding nominal expenditure ceiling covering 100 percent of government expenditure is appropriate. To support the commitment to the resource allocations approved under the MTEF, a number of prioritization, control, and accountability arrangements need to be put in place.

Beyond the Annual Budget is a comprehensive review of country experience with Medium Term Expenditure Frameworks (MTEFs) worldwide. It looks at countries both with and without MTEFs over the period 1990 to 2008 to obtain results about their impact on fiscal performance.

This letter provides an assessment of recent macroeconomic developments in Benin and an update on the discussions of Fund staff with the Beninese authorities on macroeconomic policies and structural reforms that could form the basis for the authorities’ request for a new arrangement under the Extended Credit Facility (ECF). An earlier assessment letter to donors was issued in December 2009 and is available at http://www.imf.org/external/pp/longres.aspx?id=4399.

This book provides detailed information on budgeting practices in OECD countries, from formulation, to approval, execution and reporting.

Budgeting and budgetary institutions play a critical role in resource allocation, government accountability, and improved fiscal and social outcomes. This volume distills lessons from practices in designing better fiscal institutions, citizen friendly budgets, and open and transparent processes of budget preparation and execution. It also highlights newer concepts of performance budgeting, accrual accounting, activity based costing, and the use of information and communication technology in budgeting. These tools of analysis are supplemented by a review of budgeting in post-conflict countries and two country case studies on the reform of budgeting systems.

The government budget should be the financial mirror of society's choices. Yet most people view budgeting as the epitome of eye-glazing subjects, rarely explained in a way that is understandable to the non-specialist and too often presented without adequate consideration of a country’s governance and institutional capacity. Government Budgeting and Expenditure Management fills a gap in the literature to redress these failings and does so in comparative international perspective. This book provides a comprehensive but pithy and easy-to-understand treatment of public financial management, taking into account a variety of special issues including budgeting in post-conflict situations, at subnational government levels, for military/security expenditures, and in countries with large extractive revenues. Distilling the lessons of budgeting reform in countries at different levels of income and administrative capacity, each chapter gradually progresses from the basic principles to the more technical aspects and then on to implementation issues, using concrete examples and illustrations from around the globe. Government Budgeting and Expenditure Management is ideally suited as the primary text for advanced undergraduate or graduate courses in government budgeting or public financial management, or as a supplementary text for courses in public finance, public economics, economic development, public administration or comparative politics. With its attention to practical implementation aspects, the book will also be of direct interest to practitioners, policy-makers, and government employee training organizations.