Dimension 16.4 assesses the extent to which the expenditure estimates in the last medium-term budget establish the basis for the current medium-term budget. This will be the case if every expenditure variation between the corresponding years in each medium-term budget can be fully explained and quantified. If it is possible to reconcile and explain the differences, this shows that medium-term budgeting is operating as a dynamic process, with each subsequent budget building on its predecessor. It indicates that medium term planning is embedded in the preparation of budgets and provides a means to strengthen fiscal discipline beyond a single year. Explanations of changes from the previous year’s medium-term budget may include references to changes in macroeconomic conditions, revision of important variables and coefficients, and changes to government policy and expenditure priorities.

Further issues regarding the disclosure and approval of the medium-term framework are covered by other indicators such as the contents of budget documentation, covered in PI-5, approval by the legislature in PI-18, and public information on the budget in PI-9.