How to Prepare Expenditure Baselines
IMF How To Notes, June 1, 2022
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Bibliographic details
- Authors: Claude P Wendling, Eliko Pedastsaar, Fazeer Sheik Rahim
- Published: June 1, 2022
- Series: IMF How To Notes
- DOI: https://doi.org/10.5089/9798400210129.061
Definition & Scope
- Expenditure baseline projections (hereafter, “baselines”) are estimates of future expenditure on the assumption that current policies remain unchanged.
- Baselines serve as reference points against which other data—such as proposed or approved budgets, or expenditure ceilings—can be compared.
- They represent neither future spending allocations nor total expected outturn because they do not incorporate estimates of the cost of new policies and the expected impact of saving measures.
Key Features
- Baselines are generally produced over a multiyear period.
- They can be calculated at any level or form of the budget classification (for example, ministries, economic classification, specific policies, functions or programs).
- Baselines can be summed up to higher levels (such as the whole budget), making them useful at both a micro and an aggregate level.
Purpose & Uses
- Provide a starting tool for budget preparation and budget negotiations.
- Offer a common reference for comparing proposed budgets, expenditure ceilings, and other fiscal plans.
- Clarify the fiscal implications of maintaining current policies, distinct from costs of new initiatives or savings measures.
Methodology & Preparation (overview)
- The note discusses the definition and objectives of baselines and the methodology used for producing them.
- It outlines how baselines should be prepared, including producing projections under the assumption of unchanged current policies.
- Baselines can be prepared at different classification levels to support both detailed (micro) analysis and aggregate fiscal assessment.
Key Success Factors for Effective Use
- Clear definition of the policy assumptions embedded in the baseline (explicitly excluding new policy costs and expected savings).
- Consistent multiyear projection practices that allow aggregation across classification levels.
- Use of baselines as a transparent reference point in budget processes to inform negotiations and fiscal planning.
Source: How to Prepare Expenditure Baselines, IMF How To Notes (2022).
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- How to Prepare Expenditure Baselines