The Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF & FSP) is a major feature of the annual budget preparation cycle. It provides the basic structure for the estimates and assumptions that underlie the annual budgets. It is designed to facilitate several important outcomes: greater macroeconomic balance; improved allocative efficiency inter and intra-sectoral resource allocation; greater budgetary predictability for line ministries; and more efficient use of public funds. Integrating the top-down resource envelope projection with the bottom-up sectoral programme expenditure estimation ensures that the policymaking, planning, and budgeting processes are linked and developed into a body of consistent goals to be achieved within a three-year period. This has become even more important for developing economies as severe economic consequences in the wake of the COVID-19 pandemic make the setting and attainment of development goals imperative.
In developing this MTEF&FSP, the broad strategic objectives of government for various sectors have been given extensive consideration. The expenditure framework reflects the resource constraints, government policies, and sector priorities within which decisions are made to maximize socioeconomic outcomes. The MTEF&FSP also endeavours to make public expenditures more efficient and effective, essentially by allowing line ministries greater flexibility in managing their budgets in the context of hard budget constraints and stipulatory policies and programmes. The MTEF&FSP will seek to consolidate the gains of the Economic Sustainability Plan (ESP) 2020 and to incept the drive for the attainment of important outcomes of the Medium-Term National Development Plan 2021-25 which include sustainable and inclusive Gross Domestic Product (GDP) growth, enhanced macroeconomic balance, improved resource allocation, and a well-diversified economy.
The effectiveness of medium-term perspective in budgeting process on the economy depends ultimately on the credibility of the expenditure estimates and ceilings as well as how this information is used by decision-makers, the private sector operators, and civil society organisations. The Administration has demonstrated commitment to Public Finance Management (PFM) reforms in Nigeria. Extensive consultations with relevant stakeholders, rigorous analysis and supportive fiscal arrangements have been employed to ensure that successive MTEF&FSP achieve the fiscal objectives through disciplined implementation of budgetary targets.
The 2022-2024 MTEF&FSP will provide guidance to Ministries, Departments and Agencies (MDAs) of the Federal Government in the formulation of policies and selection of projects and programmes to ensure economic development. The MTEF&FSP will also provide further impetus to the efforts at ramping up ongoing drive to accelerate investment in critical infrastructures and human capital, diversification of the government revenue base for enhanced social welfare and sustained improvement in business environment. Federal Government's annual budget for 2022-24 fiscal years, deriving from this MTEF&FSP will encapsulate government's plan to accelerate our economic recovery process, promote social inclusion and strengthen resilience of the economy.