Third, line entity's accountability in PEM is broader. Accountability in the past system is in terms of physical and financial performance and compliance with rules. Both systems encourage agencies to limit unit cost to a standard, thereby promoting efficiency. In the past system, DBM had primary responsibility and authority for making detailed budget allocations and correspondingly diluted the accountability of agencies. 2.1 General Definition of MTEF MTEF is the PEM component that helps ensure that new expenditures approved for a budget year can me funded over the medium-term.
Planning establishes the strategic priorities of the government over the mediumterm.
Budgeting allocates funds to programs and activities that help meet those priorities. An MTEF is bettersuited for this since it involves a rolling three year program. Years 2002 and 2003 are called the outer years of the three year period. The estimate for each outer year is generally referred to as the baseline budge t for that year. Come 2001, the relevant three year period becomes 2002-2004.