Question 7

Does the Executive’s Budget Proposal or any supporting budget documentation present expenditure estimates for a multi-year period (at least two-years beyond the budget year) by any of the three expenditure classifications (by administrative, economic, or functional classification)?
 * a. Yes, multi-year expenditure estimates are presented by all three expenditure classifications (by administrative, economic, and functional classification).
 * b. Yes, multi-year expenditure estimates are presented by two of the three expenditure classifications.
 * c. Yes, multi-year expenditure estimates are presented by only one of the three expenditure classifications.
 * d. No, multi-year expenditure estimates are not presented by any expenditure classification.
 * e. Not applicable/other (please comment).

Guidelines
Budget decisions for the upcoming year can also affect the parameters of future budgets. It is therefore useful to estimate revenues and expenditures for multi-year periods, understanding that these estimates might be revised as circumstances change. Sometimes referred to as a Medium Term Expenditure Framework (MTEF), a three-year period — that is, the budget year plus two more years — is generally considered an appropriate horizon for budgeting and planning.

Question 7 asks if multi-year expenditure estimates are presented by any one of the three expenditure classifications — by administrative, economic, and functional classifications — which were addressed in Questions 1-5 above. Each of the classifications answers a different question: administrative unit indicates who spends the money; functional classification shows for what purpose is the money spent; and economic classification displays what the money is spent on. To answer “a,” the Executive’s Budget Proposal or its supporting documentation must present expenditure estimates by all three of the expenditure classifications for at least two years beyond the budget year. To answer “b,” multi-year expenditure estimates must be presented by two of these three classifications. A “c” answer applies if multi-year expenditure estimates are presented by one of the three classifications. Answer “d” applies if multi-year expenditure estimates are not presented by any of the three classifications.

1) Minimum for accepting a multi-year economic classification - the case of the Philippines in OBS 2017
We accepted this from the Philippines.

2) Some, but not all, expenditure by economic, administrative, or functional classification
Some countries present some, but not all, of expenditure by economic classification (for example: Botswana, Trinidad and Tobago, and Zambia). In these cases, if more than 2/3 of expenditure is presented by economic classification, the answer should be “a.” If less than 2/3 of expenditure is presented, it should be a “b.”

Some countries also present partial administrative classifications (Indonesia IYR in Q68 and Philippines YER in Q85) or functional classifications (Papua New Guinea YER in Q85). These cases were also accepted in OBS 2019 as more than 2/3 of expenditure is presented in the classification.

3) What counts as an economic classification?
In OBS 2019, we agreed that current and capital disaggregation are not sufficient to qualify as an economic classification. For an economic classification to be counted, it should have some level of disaggregation below the level of recurrent expenditures (such as wages or interest payments), though capital expenditures presented as a single line item is acceptable. In the case of Vietnam, their use of an “economic classification” shows varying degrees of detail across their budget documents. Vietnam’s EBP and EB include some categories below current expenditure, including interest payments, even though wages and salaries are not shown. The classifications shown in these two documents were accepted as economic classifications in OBS 2019. However, in Vietnam’s YER, expenditures were only shown with expenditure categories for capital, current, and contingencies. Because there was no disaggregation of the current expenditure, this presentation was not accepted as a economic classification in OBS 2019.