From Annual to Medium-Term Budgetary Framework: Evolution of Public Financial Management in Bangladesh

Abstract

The financial management of the Bangladesh government was in a precarious position in the late 1980s. The budget size increased manifold compared to that of the 1970s, ominously relying on development assistance that concurrently meted out feeble fiscal management. To ameliorate this creeping fiscal position, the Government undertook an array of financial management reforms, most of which came through the implementation of the Medium-Term Budgetary Framework (MTBF). Reforms in budget forecasting, budget presentation, linkage between the budget and medium-term macroeconomic goals, and modernization of accounting and auditing were major components targeted and transformed in the reform process. In this paper, I provide a historical overview of the budgeting, accounting, and auditing processes before the 1990s to explicate the necessity for the reforms brought about under the aegis of the MTBF. I then elaborate on the major reforms in budgetary, accounting, and auditing practices introduced under the MTBF.