Its appeal is based on the fact that what was implemented in the past enjoyed the endorsement of the donors. The third way of setting the ceilings is to combine the first two methods. This method essentially assumes that the priorities of the government have not changed and that the donor preferences, levels and areas of support have not changed. Its obvious flaw is that donor preferences and levels of support are always dynamic. The fourth method is to use some international standards that are recommended for certain sectors.
Examples are health expenditure per capita, or education expenditure per child.
This can also be combined with the use of unit costs arising from some established benchmarks that are deemed ideal for particular sectors. Health and education sectors are particularly amenable to this kind of criterion. Depending on the allocation criterion chosen, the sectoral ceilings can then be derived. Once the ceilings have been set, quite often by the Ministry of Finance, they are then communicated to the line ministries for them to start preparing their budgets. Quite often, the exercise of budget preparation will involve going through a few iterations as it is likely that the first run will fail to accommodate all the activities within the allocated ceiling.