Performance Budgeting and Medium-Term Expenditure Frameworks: A Comparison in OECD Central Governments

Previous literature indicates that the success of performance budgeting (PB) requires budget flexibility and the implementation of medium-term expenditure frameworks (MTEFs). This study focuses on the interlinkages between PB, MTEFs and budget flexibility in 34 OECD central governments. Most countries have adopted a medium-term perspective in the budget process, but budget flexibility is limited. The findings show that MTEFs, when implemented in the past, are positively associated with PB implementation. Countries which present a higher use of performance evaluations apply more intensified monitoring and public disclosure of organizational performance if ministries/agencies do not meet performance targets.