MTEF Case Studies
205
In the past few years, there has been recourse to supplementary budgets due to unexpected factors such as revenue shortfalls as well as inadequate budgeting for certain items. In addition, some fundamental aspects of the PFM reforms are still lagging, in particular, a sound commitment control system. This loophole has resulted in the accumulation of a large float and payment arrears, which has hampered sound execution of the budget.
Influences Up to 2008, with the debt target set by the Public Debt Law, important advances were made in the area of fiscal consolidation and reduction of public debt from high levels. However, Jordan was hit hard by the increases in oil and food prices in 2008 and the global financial crisis in 2009. As a result, fiscal performance has slipped relative to the budget. The launch of the MTBF in 2008 coincided with a period of heightened uncertainty, and it has therefore not yielded the expected positive impact. There has been strong political support for PFM reform, supported by major donors. However, the MTEF process may have not been fully internalized beyond the MoF and main spending agencies. Also, the turnover of ministers of finance in Jordan is particularly high, and not all ministers have the same level of commitment to PFM reform and fiscal discipline. Finally, high-level political decisions sometimes override the MTEF, which hampers fiscal discipline. The process of preparing the general budget is now subject to a legislative framework and specific timetable, bringing clarity to all stages of budget preparation. However, some weaknesses in the PFM system have adversely affected the success of the MTEF, especially the commitment control system and forward estimates for current spending. There is a perception that the very ambitious PFM reform strategy has put a substantial burden on the General Budget Department, which does not have adequate human resource capacity. In addition, capacity in spending agencies varies greatly. As part of the ongoing reform, the General Budget Department recently created an Expenditure Policy Division to provide more in-depth analysis of expenditure policy options. Development partners played a lead role in promoting and developing the MTEF, for which the government received intensive technical assistance. There is a need to improve coordination among providers and to design a well-defined framework with identified tasks and a clear division of labor.