SOCIAL-ECONOMIC SIGNIFICANCE AND ESSENCE OF MEDIUM-

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financial resources to carry out its economic, social, political and environmental 
functions. 
Approaches to developing a sector MTEF vary. The process is usually 
coordinated by the finance/planning department but requires significant inputs from 
line departments. As with the usual annual budget cycle it generally involves a 
combination of ‘top down’ approaches – with the finance department setting agreed 
expenditure ceilings consistent with macroeconomic stability – and ‘bottom up’ ones 
in which line departments cost what they need and try to justify why they should get 
a greater share of the available cake. The final outcome is arrived at through a 
process of iteration. For the purposes of an MTEF it is not necessary to cost every 
line item required for every sub component of every activity of every programme. 
This would be unwieldy and of little use to policy makers. If the MTEF relates to all 
sectors and forms the basis of broad structural adjustment type support one might 
expect health just to be covered as one item (although primary health care might be 
separated out). If the MTEF is supporting the development of sector support one 
would expect much greater detail. The basis would have to be agreed at the country 
level. Options might include using broad budget heads e.g. medical education and 
training or other approaches such as primary, secondary and tertiary care. Detailed 
line budgeting need only be included in the annual budgets, which would need to be 
consistent with the MTEF.
In short, the annual budget contains the detail for the coming year; the MTEF 
shows broad directions for a longer period with the degree of detail determined 
through discussions between key stakeholders (notably finance/planning, the line 
department and donors). This places greater onus on line departments to cost the 
services or functions they are responsible for. In practice, the financing of health 
services is extremely fragmented and there is little data on the unit costs of providing 
services. At the outset resources may be allocated in a very skewed way, with a heavy 
emphasis on salary costs and on tertiary hospitals. It may be sufficient to include a 
scenario which starts shifting resources in the right direction, such as more non-salary 

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costs, especially maintenance, and primary health care especially immunization. At 
later stages it should be possible to introduce more sophisticated or fine tuned 
approaches for service standards (including staffing requirements by type of facility), 
costing these and aggregating them. In simple terms at the outset the aim might be to 
move in the right direction without necessarily knowing what the destination should 
be – the destination is determined during the process. 
A number of factors make it difficult for low income countries to implement 
MTEFs.

Macroeconomic instability – rapid inflation can render forward planning 
impossible.

Lack of quality (and timely) financial information – data on donor flows is 
generally poor which is a major problem in aid dependent countries. In countries with 
multiple funding channels accurate data is difficult to obtain. National Health 
Accounts (or simpler rapid resource mapping approaches) can help address this.

Weak financial systems – systems may not be in place to inform budget 
holders on whether budget ceilings are being adhered to.

Capacity and institutional weaknesses – there may be weaknesses within 
line ministries to develop and present priority programmes effectively. Ministry of 
finance staff may also lack the capacity, or objectivity, to approve the most cost 
effective programmes.

Lack of budgetary discipline – budgets are not treated seriously with a 
large number of supplementary allocations made during the year.

Overambition – ministries of health, like many other ministries, often 
attempt to achieve too much with too little, spreading their resources too thinly 
resulting in poor performance across the board. Realistic costings may mean that it is 
not possible to provide adequate financing even for existing services. Yet there are 
major incentives to develop new programmes – in part because many donors are 
willing to fund capital and not recurrent costs.

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
Lack of realism – projections are often made on the basis of overestimates 
of revenue sources. Given this wide range of challenges, in some situations more 
limited approaches might be more appropriate. The constraints may need to be 
addressed before a full scale MTEF can be implemented. 
Analyzing the foundations of the budget process in the Republic of Uzbekistan, 
regulatory and legal basis and stages, as well as the study of the existing budget 
system, the structure of the State budget and its forecasting methods, showed that 
there 
are some shortcomings that limit the possibilities of consistent and effective use of 
budget funds in the practice of budget planning.
Estimated planning practically avoids the problem of determining the results of 
financing. In other words, costs themselves act as results. Budget planning is limited 
to one year, and it does not provide an opportunity to direct the budget policy to 
achieve priority tasks and goals of socio-economic development that deviate from the 
scope of the current year. As a result, the national and sectoral programs that are 
adopted with a view to implementation in the medium and long-term future are often 
not linked to budget possibilities. 

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