Governance and natural resource development

Contrary to the view of the resource curse theorists, the revisionists advocate that in order for the booms and busts to be handled by mineral dependent countries, there should be strong institutions, democratic governance that is responsive and technical capacity abundance (Rozner & Gallagher, 2007).

The concept of natural resources can be approached in several ways, which may include a distinction between renewable natural resources (such as forests, water and biodiversity) and non-renewable natural resources (such as metal minerals, including bauxites, gold, diamonds and manganese, and mineral fuels such oil and gas) (Ushie, 2013; Bermudez-Lugo, 2011).

The Organisation for Economic Co-operation and Development (OECD) has defined national resources as:

natural assets (raw materials) occurring in nature, that can be used for economic production or consumption. These are naturally occurring assets that provide use benefits through the provision of raw materials and energy used in economic activity (or that may provide such benefits one day) and that are subject primarily to quantitative depletion through human use. They are sub divided into four categories: mineral and energy resources, soil resources, water resources and biological resources.

(Ushie, 2013, p. 3)

In the 21st century, natural resource governance has become an integral part of international development both as a discipline of study and practice policies. Governance as a concept has gained global attention among policymakers and been debated on since the mid-1990s. During that period, it became evidently clear that there is a ‘vital connection between open democratic and accountable systems of government and respect for human rights and the ability to achieve sustained economic and social development’ (OECD/DAC, 1995, p. 5)

Governance as a concept has been defined in various ways. For example, the World Bank defines it as:

the traditions and institutions by which authority in a country is exercised for the common good. This includes:

(i) The process by which those in authority are selected, monitored, and replaced

  • (ii) The capacity of the government to effectively manage its resources and implement sound policies, and
  • (iii) The respect of citizens and the state for the institutions that govern economic and social interactions among them.
  • (Kaufmann, Kraay & Mastruzzi, 2010)

In the same way, according to the United Nations Development Programme (UNDP):

Governance is the system of values, policies and institutions by which a society manages its economic, political and social affairs through interactions within and among the state, civil society and private sector. It is the way a society organizes itself to make and implement decisions - achieving mutual understanding, agreement and action. It comprises the mechanisms and processes for citizens and groups to articulate their interests, mediate their differences and exercise their legal rights and obligations. It is the rules, institutions and practices that set limits and provide incentives for individuals, organizations and firms. Governance, including its social, political and economic dimensions, operates at every level of human enterprise, be it the household, village, municipality, nation, region or globe.

(UNDP Policy Document on Governance for Sustainable Human Development, 2004, p. 6)

Similarly, in the view of the European Commission:

Governance concerns the state’s ability to serve the citizens. It refers to the rules, processes and behaviours by which interests are articulated, resources are managed and power is exercised in society. The way public functions are carried out, public resources are managed and public regulatory powers are exercised is the major issue to be addressed in this context. In spite of its open and broad character, governance is a meaningful and practical concept relating to the very basic aspects of the functioning of any society and political social systems. It can be described as a basic measure of stability and performance of a society. As the concepts of human rights, democratization and democracy, the rule of law, civil society, decentralised power sharing, and sound public administration gain importance and relevance as a society develops into a sophisticated political system, governance evolves into good governance.

(Communication on Governance and Development, October 2003, cited in UNEP, 2013, p. 13)

In the definitions above, the common theme is how society can organise itself and also the kind of relationship that exists between a state and its people. The definition by the UNDP distinguishes three very important spheres in society, namely the state, civil society organisations and the private sector; however, the definitions by the World Bank and the European Commission are more state-oriented. Governance therefore must incorporate these three spheres and other relevant institutions that can facilitate the management of resources of a country for the greater good of its citizenry.

From the above discussion, governance therefore can be described as the processes that are needed to deliver public goods and services. Critical to this process are the mechanisms needed and how they are used to negotiate various interests by different stakeholders in society (Johnson, 1997) and also the processes and tools used for in ‘steering of a people’s socio-politico-economic development’ (Kauzya, 2003, p. 1).

It is governance that balances the utility maximising stakeholder’s interest and the interest of society in general. For this balance to be carried out effectively, it involves the establishment of institutions and the creation of mechanisms to enforce and supervise these institutions to work effectively and efficiently (Wunsch, 2000).

Similarly, governance can also be distinguished from government in that the former is broad in nature (which includes a wide range of stakeholders such as actors of government, the civil society as well as the private sector) while the latter is narrow (including the central and local government).

Several donor countries and organisations have made good governance a prerequisite for development aid. In view of this, most if not all of these donor countries and organisations have their own indictors to distinguish good governance from failing governance. However, an overview of the development literature summarises the following indicators for quality governance:

  • (a) Strong institutions: This includes the existing of formal laws as well as rules and informal institutions such as traditions, norms and codes of conduct;
  • (b) Participation and voice: This is concerned with consensus orientation.
  • (c) Accountability: This is related to transparency. It involves accessible information, institutions and processes.
  • (d) Equity: This relates to the rule of law. The extent to which the governing laws are enforced fairly, laws such as human rights should be applied impartially
  • (e) Direction: This is about leadership and involves the strategic vision of the leaders. The leaders are to have a long term understanding of the development needs of the people and be able to device strategies to achieve them.
  • (f) Performance: The institutions and state organizations must respond to the needs of the people as well as be efficient and effective in the use of resources to achieve outcomes.
  • (UNEP, 2013)

The governance concept started rising in the development debate during the 1990s. Most development authors and donors have argued for good national and local governance as an important prerequisite for sustainable development. Specifically, on local government, Kauzya (2003, p. 1) writes:

local governance is being promoted in a number of African countries because it is believed that it provides a structural arrangement through which local people and communities with the support from other national, regional as well as international actors can participate in the fight against poverty at close range.

The institutions should be fair and equitable in carrying responsibilities, governance must be familiar to the people being governed and culturally appropriate as well as promote the participation of the relevant stakeholders and offer the mechanisms for resolving conflicts that may arise and provide governance that is practical to the needs of the people (DANIDA, 1999; Kauzya, 2003).

On the issue of actors, good governance promotes the inclusion of all stakeholders, which includes government, civil society and the private sector as well as the local people. Determining who a stakeholder is, the procedures for their selection, what they will do, and how they will do it are all vital for the understanding of governance. The key elements here include promoting broad participation, transparency, legal responsibility and legalising, as well as entrenching and respect for the rule of law.

The overall effects of governance are normally evaluated and measured against the set out goals. The most pivotal question to assess governance effects is what is the extent to which the material and or immaterial goals can be achieved? Goals may not always be explicitly formulated in a way that can be measured and could also vary between different actors (Kauzya, 2003).

According to Siegle (2007, p. 35), *[e]ighty percent of all hydrocarbon-rich countries have autocratic governments. Nearly half of the world’s 44 remaining autocracies, in turn, are rich in hydrocarbons or minerals.’ It is not accidental that this pattern is occurring, the ‘[c]ontrol over revenue streams generated by natural resources strengthens the ability of autocratic leaders to feed patronage networks and perpetuate their hold on power, irrespective of the living conditions for the majority of the population’ (2007, p. 35) The author argues that livings standards for most people in mineral-rich autocratic countries are worse consistently than other countries with similar income levels.

Therefore, for Siegle (2007), autocracy, poverty, corruption and instability are both defining and perpetuating characteristic of the resource curse.

Furthermore, it has also been argued that as the revenues of mineral wealth countries boom, the autocratic leaders in these countries have less motivation to forge consensus ‘with domestic opponents and can behave more brazenly on the international scene’ (Siegle, 2007, p. 35 37).

Thomas Friedman describes this situation as the first law of ‘petro politics’. Oil prices and the pace of freedom tend to move in entirely different (opposite) directions, specifically in oil dependent countries (Friedman, 2006).

Siegle (2007, p. 35) states that ‘on a democracy scale of 0-10, the average hydrocarbon-rich country scores a zero. The global average is 6 ... These differences have enormous consequences on how revenues generated from the mineral resources are used.’

Besides autocracy, social development is another challenge facing mineral wealth countries. For example, Siegle (2007, p. 38) writes that:

Hydrocarbon-rich countries with per capita incomes between US$1,000 and $2,000 experience an average infant mortality rate of 33 (per 1,000 live births) vs. 28 for the income cohort as a whole, or 20 percent higher. At per capita incomes between $2,000 and $4,000, the rates are 39 and 29 - a third more ... Mineral-rich countries, in contrast, match the global infant mortality medians for each income cohort.

Aside this, mineral wealth countries also lag behind in other social sector indices such as education, healthcare and life expectancy and the people’s access to other social amenities. These differences explain the skewed development patterns witnessed in mineral wealth countries as the revenue of the mineral resources accrue to a small fraction of the population, making the majority of the population wallow in abject poverty and making the per capita income figures

Theories and concepts 33 of these countries very misleading and not speaking to the results on the ground.

In order for development challenges to be addressed, the root cause of governance problems will have to be tackled. This is because that is what perpetuates the dysfunctions of other sectors. According to Siegle (2007), the few mineral wealth countries that have been able to tackle the democratic challenge have benefited while avoiding the negative impacts of the resource curse. Examples are Botswana, Norway, Chile, Mexico and South Africa. The author further argues that ‘political competition, popular participation, and oversight of public officials’ are essential (2007, p. 38). He further adds that ‘[t]he more the democratic processes of transparency and public accountability take hold during these transitions, the greater the likelihood that the general population will benefit from resource wealth’, but if the democracy is superficial then there is the likelihood of the country suffering the scourges of the resource curse. Siegle underscores the importance of creating democratic institutions, arguing that ‘democracies’ oversight mechanisms are what contributes most to the consistency and stability of their development performance’ (2007, p. 39).

In a similar argument, Collier and Hoeffier (2015) also posit that democracies that have relatively stronger systems of checks and balances are in most cases less susceptible to the negative effects of the natural resource curse, an example being a free press. Media that is independent can play an important role in promoting transparency, investigating corruption and allegations of corruption, holding leaders accountable to their promises and policies, drawing the government’s attention to the social challenges of the citizens and increasing adherence to the rule of law (World Bank, 2003; Siegle, 2004)

In view of this, Siegle advocates that the focal point of intervention with autocratic and undemocratic governments is to strengthen institutional checks and balances. He also suggests that ‘[c]reating controls on corruption, expanding space for the private sector, and strengthening civil service capacity are sensible areas of reform that are generally less than pushing for political rights and civil liberties’ (2007, p. 39). This, according to Siegle, will go a long way to militate against the pernicious effects of the resource curse.

There are several strategies for spending natural resources rents in the development literature. Some authors have argued that mineral rents will be better used if all or realistically part of the rents are distributed to the citizens through a system such as the transparent universal cash transfer (UCT) (Moss and Young, 2009). The rationale is that the government will then be able to have the incentive to tax back at leastsome part of the transfer. Underlying this argument is that it would develop a fiscal contract between the citizens and the government-built mechanisms for accountability and create a responsible constituency for the management of the natural resources (Moss and Young, 2009). This strategy has the tendency to create governments’ conventional tax system reliance and may not necessarily generate the benefits that are sometimes derived from direct transfers.

The transfer through pricing strategy is another way. This is especially common in oil producing countries. This kind of transfer works by the government providing cheap fuel policies or providing energies for domestic consumers and citizens of the country through subsidised prices (Gelb and Majerowicz, 2011).

It must be noted, however, that this practice in its extreme form can have serious consequences for a country’s growth and development. It could lead to waste in spending, growing consumption and also promote fuel smuggling to neighbouring countries where the prices of fuel are comparatively higher. This can ultimately affect the growth of a country and make sustainability difficult, which in many cases will also make it politically difficult to reverse the policy.

In addition, the transfer through committees strategy explains that rents can be distributed through community-based programmes. A classic example of adopting this strategy is Indonesia, which is building on a long tradition using local action to share public spending through different programmes to the rural areas. These programmes have been successful generally in creating jobs and building infrastructural facilities in the rural areas as well as building the capacity of the local people (Gelb and Majerowicz, 2011).

Another strategy distributes natural resource rents to individuals and households through an institutionalised individual distribution programme. According to Reinikka and Svenson (2007) such distribution, such as cash grants to schools, has revealed the need for high transparency in such programmes to reduce leakages. However, countries such as South Africa have been able to set up a good system of cash transfers, such as child allowances, pension allowances and disability payments among others (Gelb and Majerowicz, 2011). It is important to note, however, that such a scheme cannot be implemented properly without national identity cards.

Critics have argued that the strategy of transferring money will encourage a culture of dependency and may also be wasted by the poor recipients who may not be able to wisely decide how to spend their monies in terms of choosing what is best for them (Gelb and Majerowicz, 2011).

While this may be true, a study by Yanez-Pagans (2008) has also argued that cash transfers can lead to a spending increase in nutrition, health, education and sanitation. This argument is also supported by the United Kingdom Department for International Development (DflD), which claims there is evidence of positive correlation between cash transfers on one side and improved health and education on the side. The DflD (2011) further argues that in some instances cash transfers can increase labour participation by promoting migration and job searches while reducing labour disincentives.

In the view of the revisionist theorists, strong and vibrant democracy with institutions that are well managed in the long run will benefit every aspect of civil life in a country. Therefore, building these effective institutions and promoting a strong and vibrant democracy must be an objective for resource abundant countries battling with the resource curse.

The work of Rozner and Gallagher (2007) proposes three interconnecting and mutually exclusive tools to tackle the resource curse. They argue that for these tools to be sustainable, they must be nurtured constantly since they are not one-off interventions. The tools are participation, transparency and management:

  • Participation: increasing public involvement in planning for, controlling, and distributing benefits arising from the resource bonanza.
  • Transparency: improving the transparency of the fiscal sector and ensuring a full accounting of natural resource revenues.
  • Management: helping government to manage its resource revenues so as to optimize social and economic benefits.
  • (Rozner & Gallagher, 2007, p. 29)

The three tools must be applied simultaneously. This simultaneous application will create intersection target zones where there are management tools in place, public participation is promoted and transparency also exists.

Countries such as Botswana and Norway are characterised by this overlap and hence have succeeded in overcoming the resource curse (Rozner & Gallagher, 2007).

Mineral wealth countries receive high rents from the mineral resources. As a result, political elites from these countries get attracted to the natural resource rents. According to Rozner and Gallagher (2007), ‘participation’ is one of the surest ways of preventing these political elites from misappropriating and embezzling the mineral rents. There are three mechanisms to give stronger voice to the public to enable them to be part of the dialogue on natural resource rents. They are T) fiscal pacts; 2) the Poverty Reduction Strategy; and 3) civil society budget initiatives’ (Rozner & Gallagher, 2007, p. 29).

According to Schneider, Lledo and Moore (2004, p. 2), fiscal pacts are ‘negotiations (and the agreements derived from them) between organised societal and political interests about public expenditure and how to finance them’. These negotiations are important as they bring fiscal issues forward for discussion.

Guatemala’s Pacto Fiscal which was signed in the year 2000 brought different stakeholders together, such as government and the private sector as well as groups of civil society with the aim of developing a proposal on tax and spending that would help the government to implement economic and social reforms that were promised during the country’s peace agreement. This was not only intended to deliver tax administration efficiency but also to set objectives and allocate revenues to achieve them and create expenditure for the delivery of social services. Furthermore, the fiscal pacts proposed tax reforms in order to improve public expenditure quantitatively and qualitatively (Rozner & Gallagher, 2007). Rozner and Gallagher further argue that in countries such as Angola, Chad and Azerbaijan, the challenge may not be so much of how to source for money to finance government spending, but how to efficiently and effectively make use of the ‘new found surplus’. They posit that in order for resource-dependent countries to have a direction, they must adopt a fiscal pact. The fiscal pact provides direction and steers the agenda of a national policy. The policy could be to reduce poverty, promote economic growth and/or reconstruction. The success of the fiscal pacts is measured by the extent to which the set targets and goals are met (Rozner & Gallagher, 2007).

Similarly to the fiscal pact, the Poverty Reduction Strategy Process (PRSP) provides an opportunity and platform for scrutinising and debating economic policy decisions, making them open and transparent. This concept originated from the World Bank and the International Monetary Fund (IMF) during 1999 and formed the operational basis for concessional lending and debt relief under the Highly Indebted Poor Countries (HIPC) initiative. In preparing the PRSP, the participatory process is used. This involves government, civil society organisations and other domestic stakeholders, international development partners such as the IMF and the World Bank as well as other international donors. They are normally updated annually with year-by-year reports on progress.

The PRSP identifies and describes social, macroeconomic and structural policies as well as interventions through programmes and projects that a country will pursue to reduce and alleviate poverty, promote

Theories and concepts 37 general growth and well-being as well as external funding (Rozner & Gallagher, 2007). The PRSP creates a platform for civil society and other key stakeholders to get involved at the early stages for priorities to be set to guide government spending. The PRSP is not only needed by countries that need debt relief but can be adopted by resource-rich countries to create a platform for domestic stakeholders and civil society groups to interact with the policymakers and contribute by influencing government spending and investments of a country’s mineral resource wealth (Rozner & Gallagher, 2007, p. 31). It must be noted, however, that some critics of the PRSP have argued that participatory process is seldom broad and that in most cases it is limited to a select group in and around the capital city of a country.

Civil society budget groups begun to take root in many countries since the 1990s. Rozner and Gallagher (2007) argue that the civil society budget is especially important in countries with rich mineral resources and where the country’s public budgets are mainly funded by revenues from mineral resources. For example, in Nigeria, the Social and Economic Rights Action Centre (SERAC) adopts this method by applying budget analyses with the aim of drawing to the yet-to-be-met needs of the citizens in that country, especially those affected by the exploration of the oil in the Niger Delta.

Furthermore, there is also the Public Finance Monitoring Centre supported by the Open Society Institute (OSI) in Azerbaijan, which was set up in 2003 with the aim of scrutinising the spending of government and proposing innovative ways to use Azerbaijan’s oil revenues to achieve the country’s economic and social priorities in the medium and long term (Rozner & Gallagher, 2007). According to Rozner and Gallagher (2007, p. 31), the main ‘aim of civil society budget work is to translate complex budget numbers into issues that people care about and to lay out policy choices in a way that the public, the media and policy makers can understand and act on’.

The civil society budget group can work at the national, regional and local levels and even at all three levels. The work could be divided so that, for example, while some would be focusing on making the budget simple for popular consumption; others may focus on drawing policymakers’ attention to understand the linkages between the budget and policy issues. Others could also build the capacity of NGOs and local community members to serve as ‘watchdogs’ while some members monitor the budget impact on the social lives of the poor and vulnerable people. Other group members can lobby and advocate for transparency to be deep and accountability to be enhanced during the government budget formulation and implementation.

The Centre on Budget and Policy Priorities has the International Budget Project (IBP), which is an intentional initiative that seeks to support the growth and capacity-building of civil society budget groups in Africa and other least-developed countries. The IBP works by providing technical, networking and financial support to civil society budget groups to build their capacity on how to analyse budgets, and also advocates for budget systems that are transparent and which meet the social needs of the citizens and country.

The IMF Board of Directors adopted an updated Fiscal Transparency Code of Good Practices in 2001 that gives guidelines on how to report and publish information on fiscal matters to member states so as to promote transparency. The coverage of this code includes separating the government sector from the private sector, making information available for the general public, the processes of budgets and standards for fiscal data. There is also a manual that supplements the code to ensure fiscal transparency and governments and other stakeholders can use a questionnaire or survey which comes with the code to access the extent to which the standards in the code are being met (Rozner & Gallagher, 2007, p. 33). Moreover, in 2005, the IMF further adopted the Guide on Resource Revenue Transparency to complement its fiscal transparency guidelines. This additional guide focuses mainly on the placement of the resource rents allocation systems that allocate revenues directly to local and subnational governments, quasi-fiscal institutions of resource-based national firms and debt payments and obligations related to extraction. Governments are mandated by the standards of the IMF to report all operations that are quasi-fiscal to the government finance statistics as part of its overall reporting responsibilities.

The Extractive Industry Transparency Initiative (EITI) is a very important instrument that has the potential to bring greater transparency into revenues from the natural resource sector. The then prime minster of Britain in 2002, Tony Blair, announced the EITI during a World Summit in Johannesburg. The EITI is sponsored and supported by the DfID. The EITI contains guidelines on how to report mining, oil and gas payments by domestic and international companies to governments. The EITI proposes a data aggregation and analyses methods by an independent third party (Rozner & Gallagher, 2007, p. 34). Critics have, however, argued that although the EITI has made some progress, there is still much to be achieved. The protocols, guidelines and other documents that are basic to the initiative are yet to be rectified and have since 2004 yet to issue a quarterly report. Schultz’s Citizen’s Guide (2005) is another tool for monitoring natural resources

Theories and concepts 39 rents and how they are spent. Schultz’s Citizen’s Guide proposes best practices from budget work to civil society leaders that can be adopted to monitor rents from the extractive industry (Rozner & Gallagher, 2007, p. 34).

Furthermore, the Publish What You Pay initiative is another instrument that can be used to enhance transparency. It was launched in the UK by a group of organisations including Transparency International UK, Save the Children UK and the OSI. The main objective of this initiative is to improve transparency in natural resource extraction countries and areas by coaxing oil and mineral companies especially to publish the data on the amounts of mineral rents they pay to governments of host countries. The rationale is to encourage these companies to publish and openly declare all information on payment transactions between them and the government, which include signed contracts, arrangements on revenues and production, royalties payments and other similar transfers to government.

The advantage of this is that civil society organisations and other stakeholders can actually compare what the company publishes with what mineral wealth governments publish. The OSI in June 2006 established the Revenue Watch Institute (RWI), which spearheads and coordinates efforts to enhance transparency and accountability in countries that are resource rich ‘by equipping citizens with the information, training, networks, and funding they need to become more effective monitors of government revenue and expenditure’ (OSI, cited in Rozner & Gallagher, 2007, p. 32) In order to enhance transparency, the RWI publishes guidebooks, reports and other tools.

Setting up resource funds is a key management tool for natural resource wealth countries. The objective is to stabilise earnings from foreign exchange over time. When there is a boom in the commodity price, revenue is put into the fund so that they are drawn and used when there is a bust or reduction in the commodity price.

Resource funds seek to remove natural resource rents from the public finance system and place them into a safe ‘lock box’ so as to prevent the political elites and other powerful actors from getting access to them. It therefore means that rent-seekers are prevented from getting access to rents from natural resources (Rozner & Gallagher, 2007, p. 34). Rozner and Gallagher (2007) posit that there have been mixed experiences with resource funds. This is because Norway presents a classical example of how it should work, but Chad providing an example of how an autocratic government can subvert an otherwise well designed resource fund.

Consequently, one other fund that has been used for decades to achieve growth and sustainability is Hartwick’s rule from 1977. According to

Lokina and Leiman (2014), the appropriate policy decision to take will depend on the extent of diversification of the economy and how stable its export revenues are. They propose that one way to move towards a diversified economy is by creating a Capital Development Fund (CDF). The idea is that it will direct revenues from minerals towards the development of human capital and the public sector, which are both very important for future sustainable growth and development.

Hartwick’s rule argues that for mineral countries to achieve general growth, development and sustainability, rents from minerals should be invested in productive assets and the country should only treat the income on those investments as the country’s income.

CDFs have been use in several countries, such as Jamaica and Nigeria. In order for a CDF to be effective, its regulations should be very tight. It is further argued that instead of the fund being used to service recurrent expenditure, such as wage bills of civil servants, it should rather be channelled into infrastructural spending and social development. ‘Properly managed such a fund should reduce future bottlenecks as it promotes diversification and skills formation in the economy, and at the same time help sterilize the exchange rate effects of mineral based foreign exchange inflows’ (Lokina & Leiman, 2014, p. 32).

Critics have, however, argued that many of the CDFs that have been used across the world have been conspicuously unsuccessful. This has mainly been due to the diversification of mineral revenues into the payment of wage bills instead of developing physical infrastructure and social development (Lokina & Leiman, 2014, p. 32)

On resource funds as a whole, Davis, Ossowski, Daniel and Barnett (2001) have argued that the impact of natural resource funds has been small, especially on the relationship between export and expenditure of government. They affirm that instead of the fund being part of the solution to fiscal challenges of resource revenue boom and bust, they are in fact part of the problem. The authors propose that instead of creating a separate fund, governments should rather address the challenges head-on. This they can do ‘by orienting fiscal policy to the long run -maintaining a sustainable non-oil fiscal balance, restraining spending when oil prices rise, transparently presenting the relevant issues to parliament and the public, and potentially hedging oil price risk using financial markets’ (Rozner & Gallagher, 2007, p. 33).

Whether a natural resource wealth country will adopt a natural resource fund or the proposal by Davis et al. (2001), there will be the need to take on board ‘a multi-year approach to their revenue and expenditure systems’. And this will require some tools of macro fiscal planning to execute this task. These tools are

  • 1. Medium-term macroeconomic frameworks
  • 2. Medium-term fiscal frameworks
  • 3. Medium-term budget frameworks
  • 4. Medium-term expenditure frameworks

All these depict the various layers of budgeting functions and also involve ‘forecasting the overall macroeconomy; setting a global budget perspective; developing multiyear revenue forecasts; and establishing budget ceilings for budgetary organizations, programs, and economic classifications of public expenditures’ (Rozner & Gallagher, 2007, p. 33).

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