Request for proposal: Strengthening Public Expenditure Management in Lesotho Through Promoting Medium-Term Expenditure Frameworks

1. BACKGROUND

The modernization of Lesotho's public financial management has been going on since 2012, with the implementation of the comprehensive reform action plan 2012/13#2017/18. Central to the country's public financial management (PFM) reforms, the Medium-Term Expenditure Framework (MTEF) process has put in place a functional econometric-based macroeconomic and fiscal framework/ model enabling projection of revenues and expenditures in the medium-term. Other key macro-fiscal indicators of the model include inter alia Government's financial obligations, composition of outstanding total debt, and interest payment.

Since 2013/14, the Medium-Term Fiscal Framework (MTFF) generated by this econometric model Budget Strategy Papers 2021/22-2023/24, Government of Lesotho (August 2020).

A fundamental component of a classic MTEF has allowed Lesotho to carry out the top-down estimation of the annual resource envelopes to fund the national strategic development plan (NSDP). Adopted in late 2014/15, the Lesotho Empirical System for Policy Analysis and Forecasting (LESPAF) is being implemented to prepare the MTFF. However, resource envelope estimates from the MTFF have been weakened by reliability and timeliness concerns, mostly explained by persistent data collection challenges from national accounts, central bank, and fiscal entities (spending and revenue). This major drawback has prevented the MTEF from having a strong positive impact on the economy in terms of better macroeconomic balance, fiscal discipline, sustainable growth, and poverty/ deprivation reduction.

2. MAIN OBJECTIVE

Further strengthen the MTEF system so as to establish a reliable MTEF-based strategic budgeting system that implements ministry clusters level (sector) MTEFs (BFPs) and subsequent CPAPs for the preparation of credible multi-year sectoral budgets as an effective anchor/ foundation for the central MTEF, focusing on the priority\socioeconomic sectors that the NSDP 2018/19/2022/23 and Sustainable Development Goals (SDG) considers as having high multiplier impacts on economic growth, decent job creation, and citizen's welfare.