Operational Guideto Prepare Medium Term Strategy and Business Plan (MTSBP) for

Line Ministry/Division in Bangladesh

Prepared by MTSBP Team

February 2013

Deepening MTBF and Strengthening Financial Accountability Project,

Ministry of Finance, Government of the Peoples Republic of Bangladesh,
20th Floor, 6th Building, Bangladesh Secretariat, Dhaka-1000.

Operational Guideto Prepare Medium Term Strategy and Business Plan (MTSBP) for
Line Ministry/Division in Bangladesh
CONTENTS
1. Introduction, Purpose, Salient Features and Outline of the Guide
(a) Basic Purpose of the Guide
(b) Salient Features of the guide
(c) Outline of the Guide
2. Rationale, Scope, Objectives and Benefits of the Medium Term Strategy and
Business Plan (MTSBP)

(a) Rationale, Scope and Objectives of MTSBP

(b) Benefits of MTSBP for LM/Division
3. Structure and Building Blocks of the MTSBP
(a) Structure of a Stylized MTSBP for a Line Ministry/Division
(b) Situation Analysis
(c)Business Plan
(d) Budget Preparation
(e) Annual Operational/Performance Plan (AOP/APP)
(f) Budget/Implementation of AOP
(g) Monitoring and Evaluation
(h) Reviewing and Reporting
(i)Feedback and Updating
4. The Analytical Framework of MTSBP
(a) Top-down Approach
(b) Bottom-up Approach
(c) Convergence of Top-Down and Bottom-Up Processes
5.MTSBP: Process of Preparation and Procedure of Approval
(a) Two Committees: ITC and IMTC
(b) Finalization of the MTSBP
(c) Selection of Projects/Programs/Activities in the MTSBP
(d) Costing of Projects/ Programs/Activities in the MTSBP
(e) Prioritization of Projects/ Programs/Activities in the MTSBP
(f) Projects/Programs/Activities: MTSBP to Budget
(g) Policy Choice for Implementation of Programs/ Projects/ Activities
(h) Inclusion of Projects/Programs in Annual Development Programme (ADP)
2

6. MTSBP: A Tool for Linking Planning with Budgeting and Resource Allocation
(a) Linkage of MTSBP with Medium Term Plan and Budget
(b) Role of MTSBP for Resource Allocation
(c) Financial Limit of MTSBP, MBF and ADP
(d) Inclusion of Projects/Programs in Annual Development Programme (ADP)
(e) Inclusion of Projects/Programs/Activities for Budget Allocation under MTBF
7.Format and Content for Preparation of MTSBP for a LM/Division
(a) General Instruction
(b) Contents of MTSBP for a LM/Division

8. Situational Assessment
(a)
(b)
(c)
(d)

Components and Aids to Situational Analysis

PEST (Political-Economic-Social-Technological) Context
SWOT (Strength, Weakness, Opportunity and Threat) Analysis
Multi-stakeholders analysis

9. Organizational Structure, Functions, Legal Mandate and Development Challenges

(a)
(b)
(c)
(d)
(e)
(f)
(g)

Organizational Structure of the Line Ministry (LM)/Division

Functions of the Line Ministry (LM)/Division
Legal Mandate and Citizens Charter
Policy and Regulatory Framework
Inter-relation of the Policy of LM/Division with Macro-level Planning and Policy
Major Development Issues and Challenges
Inter-Ministry Cross-Cutting Issues and Co-ordination

10. Vision, Mission, Strategic Objectives and Ministry Level Outcome/Output

(a) Vision
(b) Mission
(c) Core Values/Guiding Principles
(d) Formulation of Vision/ Mission Statement
(e) Strategic Objective
(f) Desirable Strategic Action
(g) Line Ministry/Division Level Outcome/Output
(h) Performance Indicator
(i) Past Trend of Key Performance Indicators (KPIs) related to LM/ Division
(j) Projection of Key Performance Indicators
3

Historical Growth Rate - Time Trend Growth Rate obtained from Least Squares
Regression - Exponential Growth Rate - Average of Annual Growth Rates - Yearwise Projection of KPIs for the Planning Horizon - Elasticity Approach - Intensity
Approach - Per Capita Approach - Density per Square Kilometer of Area

11. Programs, Projects and Financing Need

(a) Identification of Programs/Projects/Activities
(b) Prioritization of Programs/ Projects/ Activities
(c) PolicyChoice for Implementation of Programs/ Projects/ Activities
(d) Costing of Programs/ Projects/ Activitiesand Source of Finance

12. Annual Performance Plan

(a) Agency/ Department wise Dominant Performance Parameters for Programs/
Projects/ Activities with Baseline and Yearly Targets for Five Years
(b) Broad Procurement Plan for Five Years

13. Monitoring and Evaluation

(a) Monitoring Mechanism
(b) Evaluation of Projects/Programs/Activities
(c) Management Information System (MIS)
(d) Dissemination of Rating
14. Relevance of MTSBP in the Medium Term BudgetFramework (MTBF)
Bibliography
Glossary

Section1
Introduction: Purpose, Salient Features and Outline of the Guide

(a)

Basic Purpose of the Guide

The basic purpose of this Operational Guide is to assist the Line Ministry (LM)/ Division of
the Government of Bangladesh for preparation, implementation, monitoring and
evaluation of their Medium Term Strategy and Business Plan (MTSBP). The guide
explains the basic concept, structure, building block, analytical frameworkand the
methodology for preparation of the MTSBP. It describes the manner and method of
identification of projects/ programs/ activities in the MTSBP along with their costing,
prioritization, and theireventual incorporation in the Annual Budget (Annual Development
Programme, ADP and Non-Development Budget). It also provides specific format,
instruction and information on data base essential for the preparation of the MTSBP.
(b)

Salient Features of the Guide

At the outset, the salient features of the Guide are described in order to underline the
ability and effectiveness with which it is expected to reach out to the practitioners of the
MTSBP.
The preparation of MTSBP for a LM/ Division in large part depends on the collation
of relevant information on its plan, budget, policy, function and projects/programs/
activities from official sources. Using these as the scaffolding, the concept and
methodology of MTSBP for the LM/ Division is intertwined and the MTSBP is prepared.
This guide provides the basic foundationfor preparation of MTSBP for a LM/
Division and should be treated as the starting point.Please remember that there is no
unique way to prepare MTSBP for a LM/Division within a country and also for the same
LM/Division in different countries.In other words, the preparation of MTSBP for different
LM/Divisions within a country or for that matter for the same LM/Division in different
countries is not similar. The reason: the state of development and the structure of the
economy in the countries differ and also, within a country, the pattern of output and
income generation at the level of sectors differs.
This Operational Guideline has been prepared in the context of the socioeconomic development of a low-income developing country,such as Bangladesh, and its
professed views on the emerging pattern of growth and development. Two cardinal
principles may be followed while using this guide to actually prepare the MTSBP. First, the
5

guide should not betreated as rigid instruction with inflexible format for the preparation of
MTSBP for a particular LM/ Division. Second, it should be the endeavor of the experts and
professionals engaged in the preparation of Planand Budget(for a LM/ Division)to innovate
and broaden the frontiers of the MTSBP on the basis of their knowledge and experience
about the state of the sector (consisting of several LM/Division) in relation to the overall
economic growth and development of the country.
(c)

Outline of the Guide

Section 2 to Section 4 describes the basic concepts, structure, building blocks

andanalytical framework of the MTSBP) for a LM/ Division. Section 5 describes the
process of preparation and the procedure of approval of the MTSBP. Section 6 outlines
the role of MTSBP in linking planning with budgeting and resource allocation. Section
7provides the format and content forpreparation of the MTSBP in a LM/Division. The
details of specific format and instruction for the preparation of various components of the
MTSBP are described in Section 8 to Section 13.
The five year periodicity of the MTSBP and the budget year and the four forward
years estimate in the MTBF has created considerable amount of confusion around the
necessity and usefulness of the MTSBP, often raising doubt whether it is subsumed in the
MTBF. Section 14 explains the relevance of MTSBP in the economic development of
Bangladesh and the role it is expected to play in devising the planning methodology of a
low-income capital starved economy so that the doubts are cleared.

Section 2
Rationale, Scope, Objectives and Benefits of theMedium Term Strategy and
Business Plan (MTSBP)

(a)

Rationale, Scope and Objectives of MTSBP

A Medium Term Strategy and Business Plan (MTSBP)1 is an indicative plan for a Line
Ministry (LM) or Division covering its development and non-development resource
requirement for a period of five years. It is a combination of strategic plan and Annual
Operational Plan (AOP) for a budgetary organisation. The MTSBP distinguishes itself from
the conventional indicative planning in a market economy framework in that it involves an
entire organisation around a single plan.
The MTSBP is a comprehensive plan for a LM/Division prepared once in five
years. International best practices indicate that the MTSBP provides the foundation for
preparation of medium-term budget. In an ideal situation and in conformity with the best
practices, the MTSBP of a budgetary unit is prepared to underpin the preparation of the
Annual Budget in the Medium Term Budget Framework (MTBF). It facilitates the
preparation of Annual Budget (Annual Development Programme, ADP and NonDevelopment) and ensures selection of most desirable project, thereby lending
consistency and sustainability of the MTBF process. The MTSBP is integrated with the
Annual Budget and the MTBF to ensure that key strategic objectives and priorities are
adequately budgeted for and achieved during the plan period. A mid-term appraisal of
MTSBP may be conducted in the third year in the light of the policy changes and factoring
in the latest growth and development scenario so as to make the project profile
contemporaneous.

1 Strategic Planning and Management (SPM) was developed during the World War II in military circles to
maneuver and place the army in most advantageous position prior to the actual war. The method of strategic
planning is being used by the private sectorto win commercial battles with competitors since the 1970s, and
by the government to win war against hunger, poverty, illiteracy, social injustice and environmental
degradation since the 1980s. It came to be used by the government for medium-term planning and budgeting
from the 1990s. The United States of America (USA) is the pioneer in introducing strategic planning for
budgetary agencies with the enactment of the Government Performance and Results Act (GPRA), 1993.
Afterwards, the technique has been used by Australia, New Zealand and other OECD countries to prepare
medium-term strategic plans for sustainable development and for critical sectors such as, energy and
transport. Several low-income economies in Asia and Africa such as Kenya, Tanzania, Uganda, the Gambia
and Afghanistan have prepared ministry level medium term strategic business plan before embarking on the
preparation of medium-term budgeting. South Africa, a country belonging to the upper middle income group
and Mongolia, in the lower middle income group has also done so. India prepares medium-term strategic
plan for its Central Ministries to support annual budgeting.

The MTSBP sets out a clear mission, embedded in a realistic vision, based on
functions, core values, strategic objectives, and development and policy issues of the
LM/Division over the medium term (five years). It indicates activity/ project/ programme
along with input, both physical and financial, and outcome and output. It is known as
Business Plan, because the functions of a LM/Division are mandated by the Allocation of
Business under the Rules of Business2 of the Government.
The formulation of MTSBPrecognizes the political economy, socio-economiccultural context and the agency constraint, i.e. the ideology of the political party in power
and in charge of the government administration. It also takes into consideration the
internal strength and weakness of the domestic economy, more specifically of the sector
covering the budgetary agency, and the external opportunity and threat concomitant with
the opening up of the domestic economy to international frontiers. The internal strength
and weakness is evaluated in terms of physical and financial resources. For a sector or an
organisation for which the budgetary agency has the main responsibility, strength includes
domestic favourable factor and weakness implies domestic unfavourable factor in terms of
manpower, skill, resources, rules and regulations, policy, etc.; opportunity implies external
favourable factor and threat implies external unfavourable factor in terms of socioeconomic-political

environment

and

global

trade-investment-labour-exchange

rate

policies. These are factored in prioritizing inter-sectoral policies and programs to achieve
pre-defined output and outcome.
While preparing MTSBP, care is taken to see that it is not too ambitious and
contains targets, which keeping in view the aggregate macro parameters of the economy
are realistic and achievable in the medium-term. It specifies a concrete and realistic action
plan with strict implementation schedule. It indicates specific projects/ programs/ activities
along with outcomes, outputs, physical and financial inputs. In the short-run, strategic and
business plans are tailored to take advantage of institutional strength. But, in the mediumand long-term, emphasis is placed on strengthening, replacing or even eliminating weak
institutions. The idea is to ensure optimal utilisation of resources, leading to growth
maximization.
Developing countries in Asia and Africahaveprepared ministry level MTSBP before
adopting the medium-term budgeting, pin-pointing its essentiality before embarking on the
medium-term budgeting framework.
2Allocation of Business among the different Ministries and Divisions (Schedule I of the Rules of Business,
1996), Revised up to June 2010, Cabinet Division, Government of the Peoples Republic of Bangladesh.

(b)Benefits of MTSBP for LM/Division

The Sixth Five Year Plan (2011-2015) of the Government of Bangladesh provides broad
indications of sector strategies for the medium-term. The sectors comprise several Line
Ministries and Divisions. As a result, the Ministries and Divisionsdo not have either
physical or financial plans in consonance with the objectives and targets set out in the five
year plan. The absence of the requisite plan for the LM/Division makes it difficult to
prepare its medium-term budget. The MTSBPof a LM/Division can be formulated in
alignment with the Five Year Plan, Perspective Plan (2011-2021), Vision 2021, Millennium
Development Goals (MDGs), Poverty Reduction and Growth Strategyat the national level,
and the Master Plans, long-term policy documents, Citizens Charter etc.
The MTSBP for a LM/Division has several advantages. Some of them are
indicated below:
(i)

The MTSBP for a LM/Division is prepared once in five years. Once it is formulated,

the Budget and Planning wings of the LM/Division would not be required to revise the
Ministry Budget Framework (MBF) every year. This would enable them to concentrate on
the preparation of Demand for Grants, which is equally critical in the realization of the plan
objectives and targets.
(ii)

The MTSBP is able to providea foundation on which the Annual Budget and the

Medium Term Budget could be prepared. It contains the Annual Performance Plan
(APP)which facilitates implementation, monitoring and evaluation of the budgetary
allocations. APPsets out what the Ministry intends to do (in terms of activities, programs
and projects) and the resources required each year during the strategic plan period to
achieve the intended outcomes. ThusAPP provides the framework for annual performance
reporting.
(iii)

The MTSBP can assist the LM/Divisions to build case for strategic and result-

oriented approach for budget support, keeping in view the medium- and long-term
objectives of the Government. The linking between the Plan and the Budget is its essential
feature.
(iv)

The medium-term view of the MTSBP becomes advantageous for the development

partners in deciding their commitment for technical andfinancial support for the
LM/Divisions in the projects/ programs/ activities. Examples are: the medium term (2011-

2015) program budget3prepared by the Ministry of Primary and Mass Education,

Bangladesh Country Investment Plan (CIP)4 prepared by the Ministry of Food and
Disaster Management, and the medium term Strategic Planfor Health, Population and
Nutrition Sector Development Program (HPNSDP)5 prepared by the Ministry of Health and
Family Welfare.Low income developing countries, which formulatestrategic business
plan,are able to attract more assistance from the donors. It becomes convenient for the
donors to plan financing of the projects/ programs.
(v) The MTSBP identifies and then prioritize projects/ programs/ activities, based on their
rationality and costs. This helps to prevent sub-optimal allocation of resources and enable
the LM/Divisions to specify sources of financing in the medium-term. The projects/
programs/ activities are implemented efficiently capturing the backward and forward
linkages typical in a production process.
(vi)

Thefinalization of the projects/ programs/ activities in the MTSBP, which takes

place in a meeting of the stakeholders in a top-down and bottom-up manner, can be

viewed as a deal which rewards all agents involved. It creates a win-win situation for all.

3 Third Primary Education Development Programme (PEDP3)- Main Programme Document,

Implementation Guide and Annexes, pp.1-392, Directorate of Primary Education, Ministry of
Primary and Mass Education, June 2011.

4 Bangladesh Country Investment Plan, A Road Map Towards Investment in Agriculture, Food
Security and Nutrition, pp.1-158, Ministry of Food and Disaster Management, Government of the
Peoples Republic of Bangladesh, June 2011.

5Strategic Plan for Health, Population and Nutrition Sector Development Program (HPNSDP),
pp.1-80, Ministry of Health and Family Welfare, Government of the Peoples Republic of
Bangladesh, April 2011.
10

Section 3
Structure and Building Blocks of the MTSBP
(a)

Structure of a Stylized MTSBP for a Line Ministry/Division

There is no unique building block for preparing a strategic business plan which can be
adopted universally by all countries. The structure and methodology for the preparation of
MTSBP in a country depends on its administrative set-up for planning and budgeting,
progress of modernizing budgeting system, availability of resources and relevant data
base. The structure of MTSBP for Bangladesh has been formulated on the basis of a
detailed examination and review of the contents of the medium term strategic plans in
India, South Africa, Tanzania, the Gambia, Uganda, Afghanistan and Mongolia, at the
back of existing capacity in the Line Ministry (LM)/Division of Bangladesh and considered
views about the administrative profundity of the Government at various levels. The
formulation and implementation structure of a stylized MTSBP for a LM/Division for
Bangladeshis presented in Table 3.1.

Table 3.1
11

Formulation and Implementation of MTSBP for a Line Ministry/Division: The Building

Blocks for MTSBP
Steps

Basic Questions

Contents of MTSBP

Assessment

Who are we?

What are we doing?

How good are we

doing?

Organization structure
Legal Mandate and Citizens Charter
Policy and Regulatory Framework
Functions of LM/Division as per Allocation of Business
Inter-relation with Vision 2021, SFYP 2011-2015, MDGs
Role, Importance and Current state of the sector
Supportive measures by the Government
PEST (political, economic, social, technical) Context.
SWOT (strength, weakness, opportunity, threat) Analysis
Multi-Stakeholder Analysis

Baseline

Where are we now?

Where do we want to
go from here?

How will we reach

there?

Past trend of Key Performance Indicators related to the LM

Major issues and development challenges
Mission and Vision Statement
Core Value/ Guiding Principle
Strategic Objective/ Goal
Ministry Level Outcome/ output
Projection of KPIs relating to outcome
Identification of Program/Project/Activity to achieve goals,
Prioritization of Program/Project/Activity within resource
ceiling
Policy choice for implementation of Programme/ Project/
Activity
Detailed sources of financing the plan
Year-wise costing of Program/ Project/ Activity
Agency-wise Annual Performance Plan with target for Key
Performance Indictors (KPIs)
Collection of relevant statistics on KPIs
Preparation of quarterly/ half-yearly/ annual performance
report
Assess progress and Review
Take Corrective Action
Feedback upstream
Revise SBP after three years

Components

Down to
Specifics

Monitoring
and
Evaluation

Feedback

How are we doing?

Do we need to
modify?

Source: Updated Operational Guide to Prepare Medium Term Strategic Business Plans (MTSBP)
for Line Ministries/ Divisions, Updated and Revised Draft, pp.1-60, prepared by the C1.3 Team,
DMTBF and Strengthening Financial Accountability Project, Finance Division, Ministry of Finance,
Government of Bangladesh, 05 November 2012.

3.2

The complete strategic planning and budgeting cycle contains eight key steps as

depicted in the Flow Chart 3.1 and the subsequent paragraphs.

Flow Chart 3.1
12

Strategic Planning and Budgeting Cycle

Feedback and
Updating

Situational Analysis

Reviewing &
Reporting

Monitoring &
Evaluation

(b)

Strategic & Business

Planning

Budget
Preparation

Budget/
SBP / AOP
Implementation

Annual
Performance Plan

Situation Analysis

The decision-makers and the budgetary agency assess the current environment of the
sector and identify the critical issues. An assessment is made about the strength and
weakness of the sector in terms of financial and physical resources, and the performance
of the sector in the light of economic growth and development at macro (aggregate) level.
The status of the sector in the context of the prevailing political economy and the socioeconomic-cultural scene, along with gender and environmental issues is assessed. The
situation analysis in brief, comprises the following: (i) the role of the sector in the overall
economic development of the country, (ii) the relative position of the LM/ Division within
the sector, (iii) rank of the sector at global level, (iv) supportive measures by the
Government, (v) major constraints for the development of the sector, (vi) PEST (political,
economic, social, technological) context, (vii) SWOT (strength, weakness, opportunity,
threat) analysis of the sector, and (viii) multi-stakeholder analysis.
The role of the sector in economic development is judged from its contribution to
aggregate GDP, employment generation, poverty reduction, promotion of equity and selfreliance. The relative position of the LM/ Division within the sectoris judged from its recent
trend in value addition (GDP). The rank of the sector inglobal context is viewed in terms of
its dominant indicators.
PEST (political, economic, social, technological) context impacts on the function
and business of the LM/Division and the Departments and Agencies placed under it.
Political context implies the facilities endowed and the constraints posed by the political
13

authorities and the government agencies. It mostly eventuates from the professed
ideology of the political party in power. Economic context implies the overall economic
situation in the country and the contribution of the sector to growth (GDP growth rate),
equity (in the class distribution of income), employment generation (both in absolute and
in relative terms, i.e. aggregate employment generation and labour intensity of the sector)
and poverty reduction (in the aggregate and among the occupation and social classes of
the population). The trend in technology (labour intensive vis--vis capital intensive) and
the problems and prospects associated with the socio-cultural environment form a part of
the situation analysis.
The MTSBP of a Line Ministry/ Division cannot ignore the constraints arising from
the PEST. The reasons are:
(i)
In a democratic country like Bangladesh with multi-party Parliamentary system,
policies and programs need to have general political consensus for sustainability
overtime;
(ii)

The strategic plan needs to conform to the political ideology professed by the

Government;
(iii)

The plan is for the welfare of the people and hence the social and cultural heritage

of the country cannot be ignored while formulating the plan;

(iv)

Success of medium-term sector plan depends on the adoption of feasible

technology.
In the SWOT (strength, weakness, opportunity and threat) analysis, strength
indicates domestic favorable factors and weakness refers to domestic unfavorable factors,
while opportunity refers to external favorable factors and threat refers to external
unfavorable factors for an agency.
Strength and weakness of a LM/Division are identified in terms of manpower, skill,
resource mobilisation, access to ICT (information and communications technology), and
the Acts and regulatory framework under which it operates.
Opportunity and threat are identifiedin terms of external factors covering the areas
of political, economic, social, cultural and demographic. The critical ones are external
assistance by donor, external collaboration, international treaty, terms of trade, exchange
rate, world prices, external trade, smuggling, immoral and illegal trade of goods and
services, etc.

14

The SWOT analysis helps in identifying the internal and external resources and
their optimal allocation. It also helps to identify strategies and activities to achieve the
desired vision and mission.
(c)Business Plan
A business plan for the LM/Division is developed in conformity with its strategic objectives
and priorities. The plan is formulated in such a way that it is consistent with the
Government policy and the development strategy set forth by the political leadership in the
country. For example, the Government of Bangladesh has adopted the targets in specific
sectors (consisting of several LM/Division) as embedded in: (i) Sixth Five Year Plan, 20112015, (ii) Millennium Development Goal, 2015, (iii) Perspective Plan, 2010-2021, and (iv)
Vision 2021. Sector-wise strategies and targets contained in these documents and
accepted by the political authorities do not have supporting plans and programs, which
are essential pre-requisite in order to meet the targets. MTSBP lists appropriate programs/
schemes/ projects for the LM/Division to achieve the targets in the medium-term. While
doing so, it focuses on the big picture of an institution, and addresses fundamental issues
to set priorities for future and to unify and pull the entire organization together around a
single plan for execution.
(d)

Budget Preparation

Itinvolves projection of revenue, costing of programme/ project/ activity and allocation of

expenditure under various Heads of Accounts of the Government.
(e)

Annual Operational/Performance Plan (AOP/APP)

APP indicates time schedule for completion of programs/ projects/ activities, performance
parameter, detailed plan for procurement and training. It sets the required course of action
and serves as a roadmap to achieve the strategic goals.

(f)

Budget/Implementation of AOP

The plan and programs laid out in the Budget and the Annual Operational Plan (AOP) are
implemented with the exercising of financial control through the Governments Budget and
Accounting System (iBAS in Bangladesh). The different stages of implementation of the
15

plan and programme are monitored. In addition, internal control and performance
management are introduced to ensure effective implementation of the budgetary
proposals.
(g)
Monitoring and Evaluation
It focuses on tracking the progress of projects/ programs/ activities and on the quality of
goods and services provided by the LM/Division. The on-going projects/ programs/
activities require regular monitoring in order to maintain the timeline and prevent
slippages. Monitoring is a part of the project implementationand is kept distinct from the
evaluation of projects. While monitoring is specific to project, programme and activity, the
evaluation is conducted for homogeneous projects so that experiences gained from the
output and outcome can be factored in the formulation of similar projects in future.
The monitoring system covers the different stages of the programme cycle,
beginning from identification and ending with evaluation. For each stage, the monitoring
mechanism generates report on progress, on the state of costs and time at regular
interval, so as to enable the authorities to initiate measures for arresting time and cost
over-runs. Monitoring of output and outcome would permit judging the efficiency (by
comparing actual output with budgeted output) and effectiveness (by comparing actual
outcome with budgeted outcome) of the projects/ programs. This is in addition to the
internal and external monitoring of the on-going development projects and programs for
the Ministry. The internal monitoring is conducted by the administrative division (of the
LM/Division) in the areas of financial and physical progress of development projects
included in the Annual Development Programme (ADP) prepared by the Planning
Commission and implemented by the LM/Division. The external monitoring of the
development projects/ programs included in the ADP is conducted by the Implementation
Monitoring and Evaluation Division (IMED) of the Ministry of Planning.

(h)
Reviewing and Reporting
This in most cases, relate to the progress and performance communicated or reported to
the regulators, Parliament, donors and even the general public. These are also
communicated to management so that timely action can be taken to adjust direction and
improve performance.
(i)
Feedback and Updating
It relates to the necessary changes and updating in the subsequent strategic business
plan based on the feedback from various sources, particularly in the light of the
16

experiences gained during the implementation of the projects. The findings of the
evaluation of projects/ programs/ activitiesalso form apart of this exercise.

17

Section4
The Analytical Framework of MTSBP

A stylized Medium Term Strategy and Business Plan(MTSBP) adopt a combination of a

top-down and a bottom-up approach, and their convergence. The analytical framework of
the MTSBP for a Line Ministry/Division is described in this section.
(a)

Top-down Approach

The top-down approach consists of five stages. These are given in Table 4.1.

Table4.1
Typical Analytical Framework of MTSBP: Top-Down Approach
Vision

Mission
Strategic Goals
Outcomes6

Strategies

It is a compelling and passionate statement of the desired future, which

the budgetary authority wants to attain in the long-run that is using
budget as an instrument for attaining policy objectives. It is outcomebased, clear, inspiring and realistic.
It is a statement defining the underlying principles behind setting up of
the LM/Division. It explains the core business of the LM/Division and
who it serves, that is its stakeholders.
This is articulated in the public plans and policies, such as Vision-2021,
Perspective Plan, the Sixth Five Year Plan 2011-2015, the Millennium
Development Goals, etc.
It is the medium-term benefits accruing to the community or clients.
Equivalently, these are the benefits of the programme/ project/ activity of
the MTSBP reaching the people for improvement of the living standard
and quality of life of the population.
A consciously intended course of action to deal with a situation. Key
characteristics of a strategy are that it is developed consciously and
purposefullyin advance of the actions to which it applies.

The vision and mission statements are developed in a participatory manner, takingthe
views of the stakeholders into consideration. In general, the vision and mission statements
6 Outcomesare medium- or long-term impact of public programs and policies on the economy and user
groups. Examples are: reduction of poverty, malnutrition, illiteracy, etc. Outputsare immediate or terminal
products and services produced during project implementation period. Examples are: number of people
employed, number of people assisted under the poverty alleviation programme, number of children provided
mid-day meal in schools, number of students who passed the government aided primary, secondary and
higher secondary schools, etc.

18

are not revised in the medium term (five-year period). Goalsare broad long-term aims of a
budgetary agency that define desired result associated with identified strategies.
Objectives are clear and measurable statements of an outcome that the LM/Division
desires to achieve over the planning horizon.7
(b) Bottom-up Approach
The bottom-up approach consists of five stages. These are given in Table 4.2.
Table4.2
Typical Analytical Framework of MTSBP: Bottom Up Approach

Outputs

It is the deliverables of the programme/ project/ activity of the MTSBP and is

visualised as final goods and services provided to the people.

Programs8

It is a group of projects or activities to achieve the same policy objective or

strategic goals. In Bangladesh, a program also refers to a multi-organizational
and broad set of interrelated operations or small projects within an
organizational program.
It is an integrated group of activities yielding output within a specified period.
A process or actions that use a range of inputs to produce a desired output
(intermediate or final).
It is the basic requirement for activities, programs and projects. These are
used to generate output. Examples are: human resource and skill, capital
asset, information technology, financial and other services, etc.

Projects
Activities
Inputs

Here outputs include not only goods and services delivered by the government, but also
policy and regulatory advice and analysis provided to the Government by LM/Division.
There has been considerable debate in economic literature on performance based output/
program budgeting whether policy advice can be regarded as an output, because it is
difficult to estimate its quantityand its quality is not uniform overtime, space and
individuals. But, officers of all Ministries spend a significant, if not a major part of their time

7 The definitions of goals and objectives are debatable. In the South Africa Strategic Planning
Framework, strategic objectives link upwards to strategic goals and downwards to strategies, while
in the USA Framework strategic goals mean strategic objectives and link upwards to mission/vision
and downwards to means and strategies.

8 However, in Bangladesh, Programs have different meaning and refer to non-development

programs to distinguish them from development projects/ activities.
19

on policy planning and advice. The Australian Budget, which is a pioneer in performance
based output budgeting, recognizes policy advice9 as output.
(c)Convergence of Top-Down and Bottom-Up Processes
The convergence of top-down and bottom-up processes occur in the following manner.
The top-down process begins with an understanding of the national priorities, outcomes
and the LM/Divisions vision, mission and core values, which are translated into broadly
defined objectives and intended results for the LM/Division. These are defined as the
LM/Divisions strategic objectives and goals. Outcomes and Outputs related to these
strategic objectives and goals are then articulated. Programs/ projects/ activities are
planned to achieve these outcomes and outputs with minimum resources and within
stipulated time period. The performance measures and indicators are identified to provide
the means to assess the progress made during the budget year and to suggest
improvement for the next years business plan and budget.
The Agencies and Departments associated with Ministry/Division suggest or
identify projects, programs and activities to achieve the stated strategic objective of that
Ministry/Division. The list of projects/programs/activities along with year-wise cost and
identified Key Performance Indicators (KPIs) is finalized from a number of consultations
between the stakeholders and the LM/Division. The consultation between the
stakeholders and the LM/Division move back and forth in a top-down and bottom-up
manner until a convergence is reached and proposals on programs/ projects are finalized.
The formulation and implementation of the MTSBP hinges critically on the major
stakeholders who are involved in almost every stage of the plan right from the beginning.
In particular, the stakeholders are associated at the time of formulation of the plan and at
the end, to review its outcomes. In between, they are also involved in the mid-term
assessment of the plan.

9 As per definition of the Australian Output Budgeting, if any policy advice is required by a Minister
or the Parliament, it should be regarded as an output. But, if any advice is required internally by a
Division/ Departmental head from the subordinate officers, it should not be regarded as an output,
because it is a routine consultation, and not required for public use by the elected Members of
Parliament.
20

Section 5
MTSBP: Process of Preparation and Procedure of Approval

The process of preparation of the MTSBP starts with the constitution of two Technical
Committees known as Internal Technical Committee (ITC) of the incumbent LM/Division
and Inter-Ministerial Technical Committee (IMTC). The formation of these two committees
and their function in the preparation of the MTSBP is described first.
(a) Two Committees: ITC and IMTC
For each Line Ministry/ Division identified for the preparation of the MTSBP, the process of
preparation starts with a kick-off meeting chaired by the Secretary and attended by all
Head of Section and Unit (in the LM/Division) and Head of all Agency/ Department under
it. At this meeting, different component of the Operational Guide prepared by the Finance
Division is discussed and major issues and steps are identified. The Secretary then
constitutes a multidisciplinary Internal Technical Committee (ITC) comprising the Head of
all Departments and Agencies and representatives of the budget and planning wings.
Conventionally, the ITC is chaired by the Additional Secretary in-charge of the
Development and Planning Wing in the LM/Division (or the Chief of the Policy Planning
Wing, as has been the case of Agriculture Ministry, where the MTSBP has been piloted).
The Internal Technical Committee (ITC) identifies the vision, mission, policy and
strategic objectives of the LM/ Division and encourages the Agencies and Departments
associated with it to suggest projects and programs to achieve the defined strategic
objective. It reviews the list of project and programs and the estimated development and
non-development expenditure put forward by the Agency/ Department. The list of projects
along with year-wise cost and identified Key Performance Indicator (KPI) is finalized from
a series of consultation between the stakeholders and the LM/Division. The process of
consultation moves back and forth in a top-down and bottom-up manner until a
convergence is reached and proposals on programs/ projects and associated cost are
agreed by all the members of the ITC.
The issues dealt by the Internal Technical Committee (ITC) are critical in the
formulation of the MTSBP. While preparing the MTSBP, the ITC and the Agencies/
Departments of the LM/ Division examine various aspects related to the identification and
choice of projects/ programs/ activities to be included in it and cross-check cost so that the

21

estimated development and non-developmental expenditure become as realistic as

possible.
The Inter-Ministerial Technical Committee (IMTC) is constituted under the
Chairmanship of the Additional Secretary (Budget, Treasury and Debt Management) of the
Finance Division, Ministry of Finance and comprising members from the Planning
Commission and related Ministries and Divisions with forward and backward linkage. The
draft MTSBP concurred by the ITC of the concerned Ministry is put up for consideration of
the IMTC. MTSBP is then revised by the ITC on the basis of comment and observation
made by the IMTC.

(b)

Finalization of the MTSBP

The revised and updated MTSBP concurred by the ITC and IMTC is placed before the
Budget Management Committee (BMC) of the concerned LM/Division. The BMC is
chaired by the Secretary of the LM/ Division and comprises representative from its Budget
and Planning wing, the Agencies and Departments, the concerned Sector Division and
Programme Division of the Planning Commission, and Ministries of Environment, Women
Development and related stakeholders. After approval by the BMC and thereafter with the
concurrence of the Honble Minister, the MTSBP is said to be finalized, and published.
This way, the preparation of the MTSBP of a LM/Division ensures involvement of all the
concerned Ministries such as, the Ministry of Finance, the Planning Commission and
major stakeholders.
(c)

Selection of Projects/Programs/Activities in the MTSBP

The proposals about the project/ programme in the MTSBP originate from diverse sources
such as the LM/ Division, Agency/ Department, development partner, programme
implementing agency, Sector Division of the Planning Commission, monitoring and
implementation report of the Implementation Monitoring and Evaluation Division (IMED)
etc. These proposals are examined in-depth by the Internal Technical Committee (ITC)
and feasible projects/programs are identified considering the absorption capacity and their
relevance to achieve the stated strategic objective of the LM/Division. Therefore, the
MTSBP considers the desirable programs/ projects/ activities, which are necessary in
order to achieve the defined strategic objective of the LM/Division over the planning
horizon, and it considers both the approved and the anticipated projects/ programs/
22

activities, i.e. unapproved projects. These projects/programs are appraised by the

LM/Division based first on their feasibility study and then cost-benefit analysis, before their
actual incorporation in the Budget.
The critical issues associated with the process of selecting the programs/ projects/
activities and finalization of the MTSBP are described below.

(d)

Costing of Projects/Programs/Activities in the MTSBP

The costing of projects/programs is taken up systematically and in a scientific manner in

the MTSBP for facilitating their choice across and within sectors. Before selecting the
project/programme, the LM/Division should ideally decide about its potential viability in the
light of the factor price movement overtime and using the standard financial-economicsocial-environmental cost-benefit analysis. The feasible sources of financing are also kept
in view. The social and environmental cost and benefit of the project can be evaluated in
monetary terms and compared with financial and economic cost. Projects with high
benefit-cost ratio (that is the ratio of the projected benefit of the programme to the
projected cost) may be accorded higher priority over others. In general, projects with
financial benefit-cost ratio less than unity are not considered for selection unless these are
justified on the basis of economic and social cost-benefit ratio.
For approved projects, year-wise capital phasing and revenue cost estimate given
in the Development Project Proforma (DPP) and Technical Assistance Project Proforma
(TPP) may be taken. However, if there be significant time lag between the approval of
project and their actual implementation, appropriate cost escalation factor may be applied
to update the cost estimate in order to make it more realistic. The escalation factor for
wage rise, variation in interest rate and exchange rate overtime during the MBF Planning
horizon may be obtained from the Finance Division.

(e)

Prioritizationof Projects/Programs/Activities in the MTSBP

In the MTSBP, the priority of projects/programs for the LM/Division is determined after
factoring in the national policies, and its vision, mission and the strategic objective on the
one hand and the availability of resources, on the other. The projects are identified
keeping in view their capability to fulfill the strategic objective of the LM/Division. Their
23

prioritization is done in a meeting of stakeholders and alternative users in conformity with

the resources availability. In brief, the process resolves the issue of competing claims
when resources are finite and constrained.
At present, the choice of project/programme is generally guided by the personality
of proponent, origin of funding and often driven by the political economy, to the detriment
of allocative efficiency. There is no central focus on project conceptualization. The LM/
Divisions do not have a base (such as the medium-term plan) on which they can fall back
upon for prioritizing the projects/ programs. On the basis of the guidelines under Budget
Circular issued by the Finance Division, the Planning Wing of the LM/ Division helps to
prepare the Ministry Budget Framework (MBF). The MBF contains brief description of the
linkage between the medium-term objective and strategy and the priority areas. It also
contains information about on-going (and in some cases likely) projects/ programs for the
budget year and four forward years for the LM/Division. These projects/programs are
accorded priority and prepared within the ceiling on expenditure fixed by the Finance
Division. The choice of project and their prioritization in the MTSBP is done by the LM/
Division without any financial ceiling. This forms the basis for subsequent prioritization in
the Ministry Budget Framework (MBF, which is done by the Finance Division) and Annual
Development Programme (ADP, which is done by the Planning Division) on the basis of
financial ceiling. The MTSBP attempts to ensure allocative efficiency focusing on project
conceptualization from the very beginning in consistency with its vision, mission and
strategic objective. The program/ project in the MTSBP are graded as Top Priority (TP),
Medium Priority (MP) and Low Priority (LP) as per the Planning Commission Guideline.
If necessary, within each of these three categories, the projects can be graded, factoring
in issues, as for example regional inequality.

(f)

Projects/Programs/Activities: MTSBP to Budget

The Ministry Budget Framework (MBF) prepared as a part of the medium-term budgeting
provide yearly allocation of expenditure for the approved project/ programme/ activity for
the budget year and for four forward years. But the allocation is made keeping in view the
LM/Division-wise financial ceiling fixed by the Finance Divisionon the basis of anticipated
resource availability over the medium-term. The final selection of the programs/ projects
for inclusion in the budget is done by the LM/ Division on the basis of detailed feasibility
24

studies and conventional benefit-cost approach, with the approval of the Planning
Commission.
The MTSBP includes both approved and unapproved projects. However,
unapproved projects cannot be considered for budgeting by the Finance Division unless
these are approved through the standard procedure for project approval set out by the
Planning Commission. In other words, for incorporation of unapproved projects in the
Budget, the LM/ Division need to take recourse to the standard DPP (Development
Project Proforma/ Proposal) and RDPP (Revised DPP) for Development Projects and TPP
(Technical Project Proforma/Proposal) and RTPP (Revised TPP) for Technical Assistance
Projects, as prescribed by the Planning Commission.
It is likely that the expenditure liability arising from the proposed project/ program/
activity of the LM/ Division, which includes the unapproved ones, exceed the MTBF
expenditure ceiling imposed by the Finance Division. Under the circumstances, the
Finance Division and the Planning Commission select the project/program according to
the priority set out in the MTSBP and within the expenditure constraint in the Budget.

(g)

Policy Choice for Implementation of Programs/ Projects/ Activities

Although MTSBP is not financially constrained, planning and budgeting experts of the
LM/Division should give due importance for identifying source of fund for effective
implementation of projectand program. As regards source of financing, Agency/
Department and the Internal Technical Committee may consider the following alternative
policy option for implementation of the project/ program/ activity. These are: (a) Public
Sector, i.e. Project/ Program to be implemented by the Government; (b) Private Sector
and NGO Participation, (c) Public-Private Partnership (PPP), and (d) Project/ Program
supported by donors.
Adequate attention should be paid to the government guidelines for public-private
partnership and for encouraging private investment including foreign direct investment.
LM/ Division should also identify the sub-sectors which need subsidy and government
support for pursuing re-distributive exercises considered essential for assisting the section
of the population who cannot afford to pay market price for the output.

(h)

Inclusion of Project/Program in Annual Development Programme(ADP)

25

The program/ project included in the MTSBP form an integral component of the Plan and
the Budget, and are used as the stepping stone in the formulation of the Annual
Development Programme (ADP). Any program/ project should not ideally be considered
by the Finance Division in the Medium Term Budgetary Framework (MTBF) and also by
the Planning Commission for the preparation of the Annual Development Programme
(ADP)unless it is a part of the MTSBP. However, the inclusion of project/ program is only a
necessary condition and not a sufficient condition for inclusion either in the Budget or in
the National Planning. The project approval has to go through the normal approval
process of the Planning Commission/Planning Division.

26

Section 6
MTSBP: A Tool for Linking Planning with Budgeting and Resource Allocation
The MTSBP can help the Planning Commission to prepare the Annual Development
Programme (ADP), which is a part of the Medium Term BudgetFramework (MTBF).
Ideally, the MTSBP of a budgetary unit is viewed as the foundation to underpin the
preparation of the Annual Budget and the MTBF.

(a)

Linkage of MTSBP with Medium Term Plan and Budget

The MTSBP of the Line Ministry/ Division is linked with the medium-term plan through the
Five Year Plan and the Perspective Plan prepared by the Planning Commission. The
MTSBP is also linked with the budgetary process through the Ministry Budget Framework
(MBF) and the Medium Term Budgets prepared by the Finance Division. The MTSBP
derives inputs from the Five Year Plan, Perspective Plan (2011-2021), Vision 2021, MDG
2015 and the Ministry level Master Plan and Road Maps. At the same time, the MTSBP
facilitates the preparation of the Ministry Budget Framework and provide input for the
preparation of the Annual Budget and the Medium Term Budget, which is prepared by the
LM/Division and the Finance Division. The MTSBP provides input for the preparation of
the Annual Development Programme (ADP)as well.
The inter-linkage among MTSBP, Five Year Plan, ADP, MBF and MTBF demands
that there is need for active participation, involvement and co-operation among the
LM/Division, Planning Commission, the Finance Division and other stakeholders from the
very beginning of the process of preparation of MTSBP. This aspect has been discussed
in detail and the specific role of themajor stakeholders has been identified in Section5.

(b)

Role of MTSBP for Resource Allocation

The MTSBP is a comprehensive planning document for a LM/Division for five years. It is
an amalgamation of the medium-term strategic plan and Annual Operational/ Performance
Plan for a budgetary unit over the planning horizon. To reiterate, it specifies vision,
mission and strategic objectives of a LM/Division and projects/ programs/ activities with
estimates for both developmental and non-developmental expenditure. It also specifies
the key performance parameters to achieve the strategic objectives. The MTSBP contains
27

a shelf of programs/ projects in the pipeline including new projects, and even unapproved
projects, harmonized with the medium-term development objective of the LM/ Division.
Thus MTSBP for a LM/ Division is a pre-requisite for the preparation of the Ministry
Budget Framework (MBF), Annual Budget and the Medium Term Budget Framework
(MTBF).
The MTSBP, Annual Budget and the Medium Term BudgetFramework (MTBF) are
integrated to improve operational effectiveness and to ensure that key strategic objectives
and priorities of the LM/Division are adequately budgeted for and achieved during the plan
period. In order to meet the development challenges, the MTSBP indicates the allocation
of resources among various programs, projects and activities so that the overall rate of
economic growth is maximized and the historical inequalities are corrected. The
operational plans are developed within the constraints of available resources indicated in
the five year plan and the MTBF.
The MTSBP ranks projects/ programs/ activities according to their priority and
costing, which makes it rather convenient for the LM/ Divisions and the Finance Division
to develop the Ministry Budget Framework (MBF) and demand for grants. The
prioritization helps the Programming Division of the Planning Commission (and also its
Sector Divisions) to prepare ADP and RADP within the resource constraint. As MTSBP
contains approved (on-going) and unapproved (anticipated) projects, in general it may be
stipulated that projects/ programs may not be included in the Medium Term Budget by the
Finance Division and in the ADP/ RADP by the Programming Division (or by the
concerned Sector Division) unless it is a part of MTSBP. If there be need to include new
project/ program (which are not a part of the existing MTSBP) in the MTBF or ADP due to
unforeseen events or as a result of the policy shift of the Government, these may be first
approved by the Budget Management Committee (BMC) of the concerned LM/ Division
and the MTSBP may be amended suitably.
(c)

Financial Limit of MTSBP, MBF and ADP

The MTSBP for a LM/ Division is prepared once in five years, and it contains both the
approved and the unapproved projects for future investment. The choice of
programs/projects in the MTSBP is not made financially constrained so as to accord it a
larger fiscal space than those under MBF (Ministry Budget Framework)/ MTBF (Medium
Term BudgetFramework) /ADP (Annual Development Programme). This feature of

28

MTSBP may be noted in the context of the formulation of the Ministry Budget Framework
(MBF) and the Annual Development Programme (ADP), which are financially constrained.
In a wider sense, the MTSBP for a LM/Division is an indicative plan with
prioritization of projects and associated resource requirement. The MTSBP facilitates the
preparation of Ministry Budget Framework (MBF) and Medium Term Budget by the
Finance Division and preparation of Annual Development Programme (ADP) by the
Programming Division of the Planning Commission through selection of the most
desirable projects and activities which could be supported by available resources, i.e.
within the resource constraint.
However, the MTSBP could be subjected to implicit financial ceiling, being
imposed by the sector-specific development expenditure indicated by the Five Year Plan,
and the medium-term targets set by Millennium Development Goals, Vision 2021, etc. The
implicit ceiling may also surface from the absorptive capacity of the LM/ Division arising
from the constraints of non-financial resources such as time, ICT, manpower and technical
skill of the implementing agencies.
The MTSBP is a planning document, and therefore, it focuses on the demand for
finance by the LM/ Division. The budget document focuses on the supply side of finance.
A higher financial demand of the MTSBP as compared to the available resources under
MTBFshould not be worrying. It is quite rational in this context.
(d)
Inclusion of Projects/Programs in Annual Development Programme (ADP)
TheLM/Divisions are expected to be prudent and realistic while conceiving new programs
and projects. The programs/ projects in the MTSBP are classified as top, medium and low
priority.10 While preparing MBF under the financial ceiling imposed by the Finance
Division, the LM/Division, Planning Commission and Finance Division may ignore the
MTSBP projects, which they consider as non-priority. Besides, unapproved projects
included in the MTSBP may not be included in the Medium Term Budget by the Finance
Division, unless these are approved by the Planning Commission and/or the Executive
Committee of the National Economic Council (ECNEC) through standard procedure for
approval.11 Although the Annual Development Programme (ADP) prepared by the
10 In this respect, we should not only given due consideration to strategic objectives but also use
the standard guidelines issued by the Programming Division of the Planning Commission for
inclusion of projects for the Annual Development Programme (ADP) as the benchmark.

11Project Preparation, Processing, Approval and Revision Procedures for Public Sector, pp.1-90,
Planning Commission, Ministry of Planning, Government of the Peoples Republic of Bangladesh,
29

Programming Division of the Planning Commission may contain unapproved projects, no

fund may be released by the Finance Division unless these go through the standard
procedure for approval set by the Planning Commission.
However, it is recognised that for some LM/Division there are too many projects (mostly
small projects) leading to higher administrative expenditure and time and cost escalation.
If feasible, multiple projects leading to the same output/outcome or achieving the same
strategic objective may be grouped together to constitute a single project/programme.
(e)
Inclusion of Projects/Programs/Activities for Budget Allocation under MTBF
The MTSBP includes approved and unapproved projects/ programs/ activities. However,
unapproved projects/ programs/ activities cannot be considered for budget allocation by
the Finance Division unless these are approved following the standard procedure of the
Planning Commission and other appropriate authorities. In other words, for incorporation
of unapproved projects in the Budget, the LM/ Division needs to take recourse to the
standard DPP (Development Project Proforma/ Proposal) and RDPP (Revised DPP) for
Development Projects and TPP (Technical Project Proforma/Proposal) and RTPP
(Revised TPP) for Technical Assistance Projects, as prescribed by the Planning
Commission.

2008.

30

Section 7
Format and Content for Preparation of MTSBP for a LM/Division

(a)
General Instruction
The MTSBP document should be brief and specific focusing on its purpose, linkage, time
frame and the necessity of updating in conjunction with the Annual Performance Plan
(APP), which in actuality, is responsible for its implementation.
Medium Term Strategy and Business Plan (MTSBP)
Purpose:The MTSBP sets out a LM/Divisions vision, mission, guiding principle, strategic
objective, policy priority, programs/ projects/ activities for a five-year period, as mandated
under the Allocation of Business.
Focus: The strategic business plan focuses on outcomes and objectives for the
LM/Division as a whole, and programs/ projects/ activities to achieve these objectives.
Linked to:

MTSBP is prepared in consistency with the Five Year Plan, Perspective

Plan (2010-2021), Vision 2021, Millennium Development Goals, policy documents,

Citizens Charter and the Ministry Budget Framework (MBF) of the LM/Division.
Timeframe:

MTSBP covers five years. It may overlap with the five year plan period. In

that case, the five year plan can draw information from the MTSBP.

Updating:

The MTSBP and the Annual Performance Plans are living documentsand

may have to be reviewed/modified/updated at periodic intervals in order to take care of the

dynamics of the change in domestic and international economic scenario and the policy
change of the government. In general, the review and modification may be made after
three years. The change in the MTSBP as a result can be effected by the LM/Division
issuing an amendment to the existing plan.

Annual Performance Plan (APP)

Purpose:
The Annual Performance Plan (APP) specifies the key performance
indicators for projects/ programs/ activities for the budget year and forward years for the
MTBF period to implement MTSBP.

31

Focus: It focuses on strict time schedule to implement budgeted programs/ projects/

activities and to monitor the associated performance indicators and targets.
Linked to:

It is linked to the strategic plan, the Annual Demand for Grants and the

MBF. In-year monitoring of the Annual Performance Plan may be conducted through
special surveys and the preparation of quarterly and annual performance reports.
Timeframe:

The Annual Performance Plan covers the MTSBP period.

Updating:In general, in-year changes to the plan should not be done as a matter of
routine. Rather, it should be done sparingly and judiciously when compelled by significant
changein strategy, policy or resources under the MTBF eventuated by unforeseen events.
(b)
Contentsof MTSBP for a LM/Division
The contents of MTSBP for a LM/Division of the Government of Bangladesh has been
decided after reviewing the guideline and experience of the medium-term strategic plan in
several low and middle income developing countries in Asia and Africa. 12The suggested
content is presented in Table 7.1. Thelength and spread of the different sections of the
MTSBP are not being specified here as it would vary depending upon the nature of
function and activity of the LM/ Division. The process of formulation of the MTSBP for all
the LM/Division should not follow the same pattern as the emphasis on issues covered in
the plan is likely to vary for the project/ program/ activity in the economic sector (such as
agriculture, etc.), material production sector (such as cement, power, etc.), and social
sector (such as education, health, water supply, sanitation, welfare, poverty alleviation
program, etc.). In essence, the nature and function of the LM/ Division should determine
the length and spread of the different chapters of the MTSBP.
Table 7.1
Contents of Medium Term Strategy and Business Plan for Line Ministry/Division
Abbreviations
Foreword by the HonbleMinister
Message by the Secretary of the Line Ministry/Division
Executive Summary
1. Background, Scope and Outline
1.1 Background, scope and objectives
1.2 Outline of the Medium Term Strategic Business Plan
2. Situational Assessment
12The countries whose plans have been used as reference include South Africa, Uganda, Kenya, Tanzania,
the Gambia, India, Afghanistan and Mongolia.

32

2.1 Role and importance of the sector in economic development

2.2 Rank of the sector at global level
2.3 Current state of the sector relating to the Line Ministry/ Division
2.4 Supportive measures by the government
2.5 Major constrains for the development of the sector
2.6 PEST (Political-Economic-Social-Technological) Context
2.7 SWOT (Strength, Weakness, Opportunity, Threat) Analysis
2.8 Multi-stakeholders analysis
3. Organizational Structure, Function, Legal Mandate, Development Issues and
Challenges
3.1 Organizational Structure of the Line Ministry/Division
3.2 Functions of the Line Ministry/Division as per the Allocation of Business Rules
3.3 Legal Mandate and Citizens Charter
3.4 Policy and regulatory framework
3.5 Interrelation of Line Ministry/Division level plan and policy with macro-level planning and
policy
3.6 Major issues and development challenges
3.7 Inter- and intra-ministry cross-cutting issues and coordination
4. Vision, Mission, Strategic Objective and Line Ministry/Division Level
Outcomes/Outputs
4.1 Vision, Mission, Core Value/ Guiding Principle
4.2 Strategic Objective and Desirable Strategic Action
4.3 Linking Strategy with Policy
4.4 Line Ministry/Division level Outcomes and Outputs
4.5 Past trend of Key Performance Indicators (KPIs)
4.6 Projection of Key Performance Indicators (KPIs)
5. Programs/ Projects and Financing Needs
5.1 Identification of Programs/ Projects/ Activities and Linkages with Policies
5.2 Prioritization of Programs/ Projects/ Activities
5.3 Policy Choice for Implementation of Programs/ Projects/ Activities
5.4 Year-wise Costing of Programs/ Projects/ Activities
5.5 Agency/Department wise estimated cost and sources of finance
6. Annual Performance Plan
6.1 Agency-wise dominant performance indicators for programs/ projects/ activities with
baseline and yearly target for five years over the planning horizon
6.2 Broad Procurement plan for five years
7. Monitoring and Evaluation Mechanism and Methodology
7.1 Monitoring and Evaluation system and mechanism
7.2 Monitoring and Evaluation technique
Annexes
Annex-1: Past trend of input and output KPIs
Annex-2: Year-wise projection of input and output KPIs
Annex-3: Costing methodology for projects/ programs/ activities
Annex-4: Department/ Agency wise costing of programs/projects/activities with year of
starting, year of completion, dominant policy, dominant KPI, cost, KPIs
Annex-5: Consolidated Development and Non-development Expenditure
Annex-6: Department/ Agency wise Annual Performance Plan

33

It may be mentioned here that atpresent the Ministry Budget Framework (MBF) of
a LM/ Division also provides information on mission, strategic objectives and programs/
projects of a LM/Division, and there are some overlapping of areas between the existing
MBF and the MTSBP. However, such duplications are minimal and unavoidable for logical
development and comprehensiveness of MTSBP and to achieve consistency between
MBF and MTSBP. It is expected that once the MTSBP document for major ministries are
prepared, both the MBF and MTSBP will be restructured and such duplication could be
eliminated overtime.

34

Section 8
Situational Assessment
(a)

Components and Aids to Situational Analysis

The situational assessment of the sector dealt by the LM/Division comprises eight subsections as indicated in Box 8.1below.
Box 8.1
Situational Analysis for the LM/ Division
(i) Role of the sector in overall economic development of the country
(ii) Rank of the sector in Asia and the World
(iii) Current state of the sector relating to the Line Ministry/ Division
(iv) Supportive measures by the Government
(v) Major constrains for the development of the sector
(vi) PEST (Political-Economic-Social-Technological) Context
(vii)SWOT (Strength, Weakness, Opportunity, Threat) Analysis
(viii) Multi-stakeholders analysis

The contents of situation analysis have already been described in Section 3.

Based on this, the situation analysis for the sector has to be made. By the role of the
sector for the economic development of Bangladesh, its contribution in the areas of
employment generation, investment, overall rate of economic growth (i.e. GDP growth),
equity and poverty reduction have to be assessed. The current state of the sector is
assessed in terms of its recent trend of output and growth rate. The position of
Bangladesh in Asia/World in terms of the dominant indicators relating to the sector
determines its rank. An example may be cited keeping agriculture sector (where the
MTSBP has been piloted) in view. Bangladesh ranks first in terms of arable land as a
percentage of land area, and agricultural raw material import as percentage of total
merchandise import; second in terms of worker per hectareandfifthin terms of production,
consumption and area under rice. The sub-sectionon major constraints for development
and supportive measures are self-explanatory. Brief discussions on PEST, SWOT and
multi-stakeholder analysis are made in somewhat detail, keeping in view their importance
and role in the formulation of MTSBP.
(b)

PEST (Political-Economic-Social-Technological) Context

35

In order to formulate the MTSBP, it is necessary to analyze PEST (Political-EconomicSocial-Technological) context and its impact on the function and business of the
LM/Division and the Departments and Agencies under it.
Political context implies the facilities endowed and the constraints posed by the
political authorities and the government agencies for the development of the sector. It
mostly eventuates from the professed ideology of the political party in power. Economic
context implies the overall economic situation in the country and the contribution of the
sector to growth (GDP growth rate), equity (in the class distribution of income),
employment generation (both in absolute and in relative terms, i.e. aggregate employment
generation and labour intensity of the sector) and poverty reduction (in the aggregate and
also among the occupation and social classes of the population). The trend in technology
(labour intensive vis--vis capital intensive) and the problems and prospects associated
with the socio-cultural environment also form a part of the situation analysis. It should take
into account the possibility of realizing the Millennium Development Goals within its
timeframe. Social and technological context covers socio-cultural constraint and
technological trends, problems and prospects surrounding the sector.
The MTSBP of a LM/Division cannot ignore the constraints imposed by the
PESTfactors due to the following reasons:
(i) In a democratic country,such as Bangladesh with its multi-party parliamentary
system and a vibrant Press (both print and electronic media), there has to be a
general political consensus about the policies and programs for growth and
development. The consensus is essential for the implementation of the policies
and programs, and their sustainability overtime;
(ii) The strategic plan needs to satisfy what is commonly described as agency
constraint i.e. the political ideology of the present government;
(iii) Overall economic development and prospect affects sector development and
growth;
(iv) Any plan cannot ignore the social and cultural heritage and constraints;
(v) Success of medium term sector plan depends on feasible technology;

(c)
SWOT (Strength, Weakness, Opportunity and Threat) Analysis
SWOT analysissets the stage for preparation of the MTSBP for a Line Ministry/Division by
way of identifying the objective and strategy to fulfill the vision, mission and goals of a
budgetary agency.

36

Strength indicatesdomestic favorable factors and Weakness refers to domestic

unfavorable factors, while Opportunity refers to external favorable factors and Threat
refers to external unfavorable factors for a LM/Division.
Strength and Weaknessof a LM/Division and its business areas are identified in
terms of domestic resources such as manpower, skill, information and communications
technology;

the

Acts

and

regulatory

framework

under

which

LM/Divisionoperates;management, research and development facility, production, value

added, investment, employment etc. of business areas under the charge of the
LM/Division.
Opportunity and Threatare identifiedin terms of external factors and related to
political, economic, social, cultural and demographic areas; external assistance by donors,
external collaboration, international treaties and global public policies, terms of trade,
exchange rate, world prices, external trade, smuggling, immoral and illegal trade of goods
and services related to the business areas under the charge of the LM/ Division.
A SWOT analysis is easy to understand and can be easily applied to LM/Division
and its allocated business. But we need to be analytical and specific in our approach,
realistic about the strength, honest about the weakness and have foresight and
anticipation about external opportunity and threat. Broadly, the SWOT analysis should
concentrate about ten factors under each category, i.e. strength, weakness, opportunity
and threat.
Basically, the SWOT analysis revolves around a set of factors which may favour
the formulation of MTSBP. These factors, whichare essential ingredients of Plan
formulation, originate from both domestic and international economy. The same set of
factors may help formulating the MTSBP and depending upon circumstances may hinder
the MTSBP process. The MTSBP is strengthened when the domestic factors exert a
favourable impact on the planning process, and it gets weakened when the domestic
factors exert an unfavourable impact.
In a similar way, the MTSBP process is endowed with opportunity if the factors
emanating from the international economy exert a favourable impact on it. On the
contrary, the MTSBP process becomes subjected to threat if the factors emanating from
the international economy exert unfavourable impact on it.
The strength and weakness arising from the domestic factors and the opportunity
and threat from the international sector act as the source of favourable and unfavourable
factors respectively in the formulation of the MTSBP. Therefore, theidentification of factors
which are responsible for the strength and weakness and the opportunity and threat
(SWOT) is essential before the start of the actual process of formulation of the MTSBP.
37

Strength and Weakness

The factors around which the strength and weakness are assessed can be grouped as:
(i) Resources; it takes the form of manpower, skill, financial and ICT.
(ii) Acts and regulations governing the sector.
(iii) Management, marketing, distribution, R&D facilities.
(iv) Domestic supply, investment, employment relating to the business of the
LM/Division.
(v) Contribution of the sector to overall rate of economic growth and promotion of
equity.
(vi) Contribution of the sector to poverty reduction, gender equity, environment and
ecology.
(vii) Productivity and quality of goods and services provided by the LM/Division.
These, as can be seen are domestic factors and are quite internal to the system. In a
sense, these are all purely domestic issues. If these factors play a favourable role in the
process of plan formulation, then these become the strengthfor the MTSBP. On the other
hand, if these factors play unfavourable role in the process of plan formulation, then these
become the weaknessfor the MTSBP.

Opportunity and Threat

The factors around which the opportunity and threat are assessed can be grouped as:
(i) Political, economic, social and cultural environment
(ii) Climate change
(iii) External trade of goods and services
(iv) External assistance by donors and foreign investment
(v) Global public policies and international treaties
(vi) World prices, exchange rate, customs duties
(vii)Immigration and migration
(viii)
Smuggling, immoral and illegal trade

The domestic factors usually remain under the control of the LM/Division. But, this cannot
be said about the international factors, which for a LM/Division is not possible to influence,
let alone decide. The local economy is always at the receiving end in this case.
Table 8.1 provides the desired Template for SWOT analysis for a specific case for
the Ministry of Agriculture for which the MTSBP has already been prepared.
Table 8.1
SWOT Analysis for the MTSBP of Ministry of Agriculture
38

Under control of the Ministry of

Not Under control of the Ministry of AgricultureExternal Factors
Internal Factors
Agriculture

Strengths

Weaknesses

Opportunities

Threats

(i) Agriculture generates 20% of GDP and employs 48% of labor force
(ii) Significant extension systems for farm technology
(iii) Experts and scientists are available for agricultural R&D
(iv) Wide network of agricultural input providers
(v) Potential for utilization of hilly areas for farming
(vi) Scope for crop diversification and expansion of hybrid technology
(vii) Scope for higher output of value added agricultural products
(viii) Water is available for irrigation
(ix) Existence of a facilitative institutional and regulatory framework
(i) Weak agricultural marketing system and high post-harvest loss
(ii) Limited access to institutional agricultural credit
(iii) Low efficiency of input use (water, fertilizer, pesticides)
(iv) Inefficient technology to meet export market requirement
(v) Inadequate infrastructural facilities for advanced agricultural science
(vi) Lack of coordination between public and private universities for R&D
(vii) Insufficient use of ICT in extension system
(viii) Inadequate support for farmers/ entrepreneurs training
(ix) Inadequate supply of quality inputs (e.g. fertilizer, seed)
(x) Internal resources are fragmented and functions are duplicative
(xi) Climate change fallout
(a) Favorable agro-climatic condition round the year for crop production
(b) Export potential for highvalue crops to upstream & ethnic markets
(c) Donors support for agriculture and irrigation
(d) Private sector participation in seed and other input management
(e) High world food prices offer incentive to farmers
(f) Export market for horticulture, floriculture and agro-based products.
(g) Scope of exports of poultry and fisheries products
(h) Substantial inflow of remittances by the Bangladeshis living abroad
(i) Scope for developing rural based and cultural tourism
(a) Environmental vulnerability (climate change, flood, drought, storm,
salinity, pest and diseases, river erosion) adversely affect
agriculture.
(b) Declining soil health and shrinking cultivable land & water resources
(c) Eroding agricultural bio-diversity and sustainable environment
(d) Absence of appropriate technology to cope with unfavorable
weather
(e) Increasing use of agricultural land for non-agricultural purposes
(f) Insignificant private sector investment in agriculture
(g) Little or inadequate donors support for agriculture
(h) Vulnerability of agriculture to shocks in external sectors
(i) Agriculture production cost may rise due to rise of imported inputs
(such as fertilizers, pesticides, machinery etc.) in future

Source: Draft Medium Term (2012-2016) Strategic Business Plan for the Ministry of Agriculture, Ministry of
Agriculture, Government of Bangladesh, December 2013.

(d)

Multi-stakeholders analysis

Stakeholders are people and organization who are likely to be affected by the activities of
the Line Ministry/ Division, and also able to influence its success or failure. As per
international best practices, it is desirable for the LM/Division to consult major
stakeholders for finalization of theMedium Term Strategic Business Plan (MTSBP). The
stakeholder analysis allows the LM/Division to take care of direct and indirect benefits of
various interest groups. In brief, the stakeholder analysis involves the identification of all
39

such groups and figure out their concerns. Conventionally, the stakeholders have been
classified as primary and secondary, depending upon their role and association with the
function and activity of the LM/Division. The findings of the stakeholder analysis are
integrated into the design of the MTSBP.
An effective stakeholder analysis can be made in the following manner.
(i) Identify the key primary and secondarystakeholders.Primary stakeholders are
those who are affected directly by the activities of the LM/Divisionfavourably or
even adversely. The secondary stakeholders are those who play an intermediary
role in the production and delivery of goods and services of the LM/Division.
(ii) Stakeholders can also be categorized according to their roles in the delivery of
goods and services, such as contributor, implementer or beneficiary.
(iii) Assess what the stakeholdersaspire from the LM/Division, what is their particular
interest and what the potential impact of the MTSBP on the interest groups is.
Table 8.2summarizes a typical case of Stakeholder Analysis as developed for the MTSBP
of the Ministry of Agriculture.

Table 8.2
Stakeholder Analysis for MTSBP of the Ministry of Agriculture
Major
Stakeholders(Priorit
y of interest)

Power
Role and
Function

Finance Division
(High)

Allocation of
adequate
resources

How
Stakeholders
can block
LM/Division
Inadequate
budget, blocking
of funds

ERD
(High)

Mobilization of
adequate

Inadequate
external

40

What
LM/Division
aspiresfrom
Stakeholders
Adequate
financial
resources

Adequate
external

Stake
How LM/Division
can help
Stakeholders
Timely, effective
and efficient
implementation of
projects; proper
audit and
accounting
Timely, effective,
efficient and

Major
Stakeholders(Priorit
y of interest)

Power
Role and
Function
external
resources

How
Stakeholders
can block
LM/Division
resources

Stake
What
How LM/Division
LM/Division
can help
aspiresfrom
Stakeholders
Stakeholders
resources for
transparent
financing
utilization of
projects needing
external resources
foreign exchange
Sufficient
Timely, effective
development
and efficient
finance and
implementation of
timely approval
projects;
of projects
accountability,
transparency
Timely
Providing
preparation of
necessary data
monitoring report and information
Conducting
Providing full
surveys and
cooperation for
statistical
designing and
analysis in time
conducting
statistical surveys

Programming
Division
(High)

Approval of
development
projects

Non-approval or
delay in approval
of projects

IMED
(High)

Monitoring of the
implementation
of projects
Conducting
surveys and
proving relevant
information for
budgeting and
result-based
monitoring
Approval of
development
projects

Delay in
preparing
monitoring report
Delay in surveys
and providing
inadequate data
and information

Withholding or
delaying the
approval of
projects

Sufficient
development
finance and
timely approval
of projects

Donor and
Development Partner
(Medium to High)

Providing
adequate
external
assistance

Unreasonable
conditionality for
disbursement

Timely and
adequate
disbursement of
funds

Ministries of Fisheries
& Animal Resources,
Water Resources,
Environment and
Forest, Disaster
Management and
Relief Division, Food
Division, Rural
Develop-ment and
Co-operative
Division, Ministry of
Land
(Medium to High)
Farmers, agricultural
labor and rural
households
(Medium to High)

Convergence of
policies and
programs under
cross-cutting
issues; efficiency
and
effectiveness of
delivery of public
goods and
services under
the cross-cutting
issues

Narrow sectoral
interests can
block or hamper
crops growth;
leakage of funds
allocated for
cross-cutting and
sector-wide
projects and
programs

Convergence of
policies and
programs for
more inclusive
growth; timely
delivery of public
goods and
services under
the cross-cutting
issues

Timely, effective
and efficient
implementation of
projects;
accountability,
transparency
Proper utilization
of funds,
monitoring, audit,
accounting,
transparency
Timely, effective
and efficient
implementation of
agriculture
projects;
timely monitoring
and evaluation,
accountability,
transparency in
activities

Providing full cooperation for

supply of labor
and other inputs;
social audit

Misuse of
agriculture
subsidies and
other government
support

Proper utilization
of
publicresources
and other
government
support, efficient

Timely supply of
quality inputs,
agricultural credit,
efficient extension
and marketing
services

BBS
(High)

Sector Divisions of
the Planning
Commission
(High)

41

Major
Stakeholders(Priorit
y of interest)

Power
Role and
Function

How
Stakeholders
can block
LM/Division

Agricultural Research
Institutes
(Medium to High)

Capacity
development for
R&D, provision
of training

Producer and
importer of fertilizers
(High)

Supply of
fertilizers to
farmers at
affordable prices
Developing agrobased and foodprocessing
industries and
developing
backward and
forward linkages
Spreadof
awareness,
implanting some
projects
Providing
agriculture credit

Too much focus

on basic and noncommercial
research, devoid
of practical use
Inefficient
distribution
channel

Agro-based
industries
(Medium to High)

NGOs
(Low to Medium)
Bank and other
Financial institutions
(Medium to High)
Media
(Medium to High)

Agricultural exporters
(Medium to High)

Transport
organizations
(Low to medium)

Political leaders
(High)

Spreading of
awareness,
providing
knowledge of
agriculture
activities
Facilitating
export of
agriculture goods
and agro-based
products
Providing
adequate
efficient transport
services at
reasonable
freight rates
Political support
for government
policies and
programs

Developing
monopolist
practices and
cartels

Stake
What
How LM/Division
LM/Division
can help
aspiresfrom
Stakeholders
Stakeholders
social audit
Commercializing Provision of
research and
adequate funds for
developing
R&D, enabling
efficient
environment
technology
Adequate supply Providing
of fertilizers in
adequate
right mix and
subsidies
quality
Fair trade and
Creating enabling
production
environment for
practices
development and
growth of agrobased industries

Fictitious NGOs,
spreading
misinformation

Awareness
generation;
social audit

High lending rate,

non-disbursement
of approved loan
Spreading
misinformation

Adequate
agriculture credit

Unfair trade
practices

Efficient export
services

Creating enabling
environment for
export of agrobased products

Charging
exorbitant freight
rates

Adequate
efficienttransport
services at
reasonable
freight rates

Creating enabling
environment for
public and private
transport

Opposition to
much needed
policies and
programs
because of

Support for
government
policies and
programs

Timely completion
of projects and
highlighting its
impact on growth,
development and

42

Awareness
generation;
social audit

Financial
resources and
creating enabling
environment
Strengthening
financial rules and
regulations
Financial support
and creating
enabling
environment

Major
Stakeholders(Priorit
y of interest)

Civil Societies (Medium

to High)

Power
Role and
Function

Build awareness
for food security

How
Stakeholders
can block
LM/Division
political ideology
Misuse of
subsidies and
other government
support-schemes

What
LM/Division
aspiresfrom
Stakeholders

Stake
How LM/Division
can help
Stakeholders

Generating
public awareness
for food security,
social audit

poverty reduction
Supply of food
grains at
affordable price to
the consumers at
large

The documents which have been used to develop the situational assessment for the
MTSBP of the Ministry of Agriculture are indicated below.
(i) Latest Annual Reportof the Line Ministry/ Division;
(ii) Ministry Budget Framework (MBF) prepared for the current budget;
(iii) Statistical Yearbook published by the Bangladesh Bureau of Statistics;
(iv) The Sixth Five Year Plan (2011-2015) (Part-1 on Strategic Directions and Policy
Framework, Part-2 on Sectoral Strategies, Programs and Policies, and Part-3 on
Statistical Annex and Technical Framework) published by the General Economic
Division, Planning Commission;
(v) Perspective Plan, Vision 2021;
(vi) National Strategy for Accelerated Poverty Reduction II (2009-2011);
(vii)Bangladesh Economic Review, published by the Finance Division, Ministry of
Finance;
(viii)
Bangladesh Public Expenditure and Institutional Review (2011)in two
volumes published by the World Bank.

43

Section 9
Organizational Structure, Functions, Legal Mandate and Development Challenges

(a)

Organizational Structure of the Line Ministry (LM)/Division

Please provide an organizational chart of the LM/Division and describe briefly the main
responsibilities of various branches and wings and inter-linkages among them. Also
specify the wings/cells responsible for carrying out the function on planning, budgeting,
deepening MTBF, monitoring and review.
(b)

Functions of the Line Ministry (LM)/Division

Please reproduce the functions of the LM/Division as mandated under the Allocation of
Business.13 It is necessary to mention all the functions because the Ministry Budget
Framework (MBF) lists the major ones of the LM/Division, summarising from the Allocation
of Business and limiting it to a maximum of eight functions. Also, the MBF is prepared for
one year. On the other hand, the MTSBP is a plan for five years. As a result, it may
include wider range of activities and programs/ projects. Herein lay the necessity to
reproduce all the functions of the LM/Division.

(c)Legal Mandate and Citizens Charter

Please prepare a list of Acts, long-term policy document, and Regulations etc. associated
with the function of the LM/Division. Also provide a brief discussion on the Citizens
Charter. As an example, a list of major Acts, Laws, Citizens Charter, Ordinance, important
Notification, long-term policy document, Rule, Resolution and Report of Committees etc.
associated with the functioning of the Ministry of Agriculture is given in Box 9.1.

Box-9.1

List of Acts, Law, Rules, Ordinance, Notification, Long Term Policy,

Resolution and Committees, Charter of Citizens of the Ministry of Agriculture

13Allocation of business among the different ministries and divisions (Schedule I of the Rules of Business
1996) (Revised up to June 2010), Cabinet Division, Government of the Peoples Republic of Bangladesh.

44

Box-9.1

1. Acts/Ordinances
1.1 The Destructive Insects and Pests Acts 1914
1.2 Bangladesh Rice Research Institute (BRRI) Acts 1973
1.3

The Seeds (Amendment) Act 2005

1.4

Fertilizer Management (Amendment) Acts 2009

1.5

Bangladesh Agricultural Research Council (BARC) Law 14 August, 1996

1.6

East Bengal (Food Stuff) Price Control & Anti Hoarding Order,1953

1.7

The Pesticides Ordinances 1971

1.8
1.9

Agricultural Market Regulation Act,1964 (Amended in 1984)

Cotton Development Board (CDB) Ordinance 1972

1.10 Seed Certification Agency (CDA) Ordinance 1972

1.11 Bangladesh Agricultural Research Institute (BARI), Ordinance LXII 1976
1.12 The Seed Ordinance, 1977
1.13 The Jute Research Institute Act, 1974 (Act XIII of 1974)
1.14 The Jute Research Institute Ordinance (Amendment) XXI 1983
1.15 The Jute Research Institute (Amendment) Act, 1996 (Act VIII of 1996)
1.16 Bangladesh Nuclear Agriculture Institute Ordinance 1984
1.17Agricultural Information Services (AIS)
1.18Barendra Multi-purpose Development Authority (BMDA)
1.19 Bangabandhu National Agriculture Award Fund Ordinance 1976
1.20 Fertilizer Management Ordinance amendment ordinance 2008
2. Rules
2,1

Destructive Insects and Pest Rules, 1966

2.2 Dept. of Agro. Extension (DAE) Technical & Non-Technical Staff Recruitment
Rules,1985
2.3 The Pesticides Rules, 1985
2.4 The Seed Rules, 1998
2.5 Fertilizer Management Rules, 2007
3. Long Term Policies
3.1 National Agriculture Policy, 2013
3.2 National Integrated Pest Management Policy, 2002
3.3 The National Seed Policy, 1993
3.4 Policy for the Innovation of climate resilience and short duration variety
crops and technologies
3.5 Policy for the determination of irrigation charge rate 2009

45

Box-9.1

3.6 National Jute Policy 2002

3.7 National Agriculture Award Rules 2009
4. Gazette Notification
4.1

Soil Research Institute (SRI): Bangladesh Gazette Notification ,October 1983

4.2

Establishment of Seed Certification Agency gazette, January 1974

4.3

Evaluation and registration procedures for Hybrid Rice varieties,December

2003

5. MOA Resolution
5.1

Bangladesh Applied Nutrition & Human Resources Development Board:

MOA

5.2

Resolution 30 December, 2001

6. Reports of the Committees

6.1

Parliamentary Standing Committee

6.2

National Fertilizer Distribution Committee

6.3

National Fertilizer Standardization Committee

6.4

National Seed Board

6.5

Fertilizer Management for Port

6.6

Pesticide Technical Advisory Committee

Source: Ministry of Agriculture, Government of the Peoples Republic of Bangladesh.

(d)

Policy and Regulatory Framework

Please provide a brief discussion on the scope, objective and policy measures of the
major medium- and long-term policy and regulatory framework to maintain stability and
quality of goods and services delivered by the LM/Division. As an example, Table 9.1
summarizes the objective and component of selected policy documents that were
consulted while preparing the MTSBP for the Ministry of Agriculture.

Table 9.1
Scope and objective of Selected Policy Documents of the MOA

46

Existing Agriculture
Ministry Policy
Documents
National Agriculture
Policy, 2013

Major Issues

Objective: Create an enabling environment for sustainable growth in

agriculture for reducing poverty and ensuring food security through
increased production and employment opportunity.
Program areas: National Agricultural Policy identifies nine program areas
where actions or policies might be undertaken. These are: research and
development, agricultural extension, seeds and planting materials,
fertilizer management, irrigation, mechanization in agriculture, agricultural
marketing, women in agriculture, human resource development.

New Agricultural
Extension Policy

Objective: (i) attainment of self-sufficiency in food grain and increase

production of other nutritional crops, (ii) ensuring sustainable agricultural
growth through more efficient and balanced uses of land, water and other
resources, (iii) increasing foreign exchange earnings through agricultural
exports, (iv) introducing high value cash crops, (v) improving quality and
availability of seeds, (vi) reducing environmental degradation, (vii)
increasing fish, livestock and forestry production, and (viii) conserving and
developing forest resources.
Program areas: The New Agricultural Extension Policylists eleven
program areas, called components. These components include extension
support to all categories of farmers, efficient extension services,
decentralization, demand-led extension, working with groups of all kinds,
strengthened extension-research linkage, training of extension personnel,
appropriate extension methodology, integrated extension activities, coordinate extension activities, and integrated environmental support.

National Integrated Pest

Management Policy
2002

Objective: Enable farmers to grow more of healthy crops, so that their

income is increased and sustained, while improving the environment and
community health.
Program areas: Maintaining ecological balance, executing appropriate
actions on pesticides, operating an effective system for implementing the
national pest management program, developing human resources as the
core of pest management, and conducting research on it.

The National Seed

Policy,1993

Objective: The overall objective of the National Seed Policy is to make

the best quality seeds of improved varieties of crops conveniently and
efficiently available to farmers with a view to increasing crop production,
farmers productivity, percapita farm income and export earnings. To

47

Existing Agriculture
Ministry Policy
Documents

Major Issues

achieve the objective, the main strategies are: strengthening the

institutional capability of the public and private sector entities and
promoting their balanced development by providing equitable
opportunities from breeding to marketing of seeds and strengthening seed
certification and quality control to ensure availability of quality seeds to
farmers.
Small-scale Irrigation
Policy

Program areas:Small-scale Irrigation Policy identifies seventeen program

areas where actions might be undertaken. These are: (i) ensure the
availability and effective use of irrigation water, (ii) expansion of irrigation
coverage, (iii) reduction of irrigation cost through effective irrigation
management, (iv) priority to surface water in irrigation works, (v) test the
quality of soil and water and determine the availability of irrigation water,
(vi) increase crop production by using on-farm water management
technology, (vii) increase crop intensity and crop production through
effective irrigation management system, (viii) increase crop production by
assisting the farmers through supplementary irrigation during drought
season, (ix) development of rural economy and alleviation of poverty
through encouraging poor, disadvantaged and unemployed young male
and female, (x) increase awareness of the farmers about irrigation
technology, (xi) provide necessary training and technological assistance to
promote irrigation skills and repairand maintenance of irrigation
machineries, (xii) accelerate research in improved irrigation machineries,
(xiii) monitoring of surface water and appropriate irrigation management
strategies, (xiv) ensure optimum utilization of water resources through use
of modern technologies such as remote sensing, geographical information
system and modeling, preparation and regular updating of ground water
zoning map on the basis of the quality of ground water level, (xv) create
region wise (coastal, hill, char, haor, etc) irrigation system suitable for
crops, (xvi) encourage use of surface water in areas where it is available,
(xvii) fix irrigation charge considering the type of machinery and
infrastructure, soil quality and crop pattern.

Policy for the

Innovation of climate

Program areas : Policy for the innovation of climate resilience and short
duration variety of crops and technologies identifies six program areas

48

Existing Agriculture
Ministry Policy
Documents

Major Issues

resilience and short

duration variety of
crops and technologies

where actions might be undertaken. These are: (i) innovation of salinity

tolerant high yielding variety, (ii) drought tolerant high yielding variety, (iii)
heat tolerant high yielding variety, (iv) flash flood, water-logging and
submergence tolerant high yielding variety, (v) short duration high yielding
variety, (vi) low input responsive/nutrient efficient high yielding variety.

Policy for the

determination of
irrigation charge rate
2009

Objective: Throughout the country, deep or shallow tube-well, along with

other irrigation machinery is needed in the Aush/Boro/Aman season for
the purpose of irrigation; an acceptable irrigation charge rate is
appropriate and necessary.

National Jute Policy

The National Jute Policy is concerned with three specific issues. These
are: (i) production of raw jute, (ii) development of a commercially viable
jute industry sector, (iii) promotion of export market for jute and jute
products.
The report has focused on the program areas, which are: problems of jute
sector, commodity-oriented jute production, improvement of jute rottening
system, improvement of quality of jute goods, accelerate advertising
activities to promote the use of jute goods in both domesticand
international markets.

(e)
Inter-relation of the Policy of LM/Division with Macro-level Planning and
Policy
It is desirable that the LM/Divisions MTSBP is made consistent with the development
perspective envisaged in the Five Year Plan, Vision 2021, Perspective Plan, Millennium
Development Goals (MDGs), Master Plan, Citizens Charter, etc. Please list five to six
major strategy and policy from each of these documents, which are considered in the
preparation of the MTSBP.In designing outcomes and outputs, the nature and pattern of
growth and development reflecting the policy and direction embedded in the five year plan
can be used as a guide. The five year plan though has a medium-term view, is built upon
the long-term views of the vision 2021 and the perspective plan 2010-2021. This way, the
policy and direction for the medium-term in the five year plan is decided by factoring in the
long-term policy objectives of the government. The MDGs appear to be a good starting
49

point for the LM/Division. The multidimensionality of the MDGs and inter-linkages among
them with its 21 targets and 60 indicators, imply that the policy agenda for the
achievement of MDGs is very broad. For example, highgrowth rate, which is a policy
objective of the government, can reducepoverty through trickle down effects. But the
growth rate, for this purpose has to be reasonably high. In the absence, the trickle down
may be delayed, lagged, slow, uneven, or may not take place at all. Under the
circumstances, it may be necessary to resort to income redistribution measures for
income generation among the poor. It may also be necessary to adopt pro-poor growth
strategy and policy specifically targeted to enhance the capabilities of the poor through
improved access to education, health, water supply, sanitation and other basic public
goods and services.
(f)

Major Development Issues and Challenges

On the basis of above discussions, identify major issues and development challenges for
the LM/Division. The discussion should be brief, to the point and specific. The growth and
development of the economy of Bangladesh is prominently on the World Bank radar. They
have identified a set of key issues and development challenges faced by the agricultural
sector of Bangladesh.14 These are summarized in Box 9.2.For comparison, the issues and
development challenges of the agricultural sector of Bangladesh as identified in Sixth Five
Year Plan (2011-2015)15 is given in Box 9.3.

Box 9.2
Major Issues and Challenges of Bangladesh Agriculture : World Bank
(i) Despite agricultural growth rate averaging 3.7 percent during 2000-2010, markedly higher
than during previous decades, the challenges remain substantial.
(ii) Gain in food security at both national and household level is frequently threatened by the
occurrence of supply and price shock caused by natural disaster.
(iii) The impact of frequent natural disaster is compounded by widespread prevalence of
under-nutrition and malnutrition.
(iv) Beyond the short-term, significant increase in agricultural productivity is required for food
supply to keep pace with rising demand. Population and income growth continue to put
upward pressure on food demand.

14Reproduced from the World Bank Report on Bangladesh Public Expenditure and Institutional
Review - Towards a Better Quality of Public Expenditure Volume II, June 2010.
15Sixth Five Year Plan (2011-2015), Part-2, Sector Strategies, Programs and Policies, Planning
Commission, Government of the Peoples Republic ofBangladesh.

50

(v) Being one of the world's most densely populated countries, there is little scope for area
expansion. Growth of food grain in future would have to come from yield growth. But, yield
growth of most crops, including rice, is stagnating.
(vi) Undersupply and underutilization of agricultural input, including high-yielding varieties of
seed, fertilizerand water is responsible for the wide gapbetween potential and realized
yield.
Source: Bangladesh Public Expenditure and Institutional Review- Towards a Better Quality of
Public Expenditure Volume II, World Bank, June 2010.

Box 9.3
Major Issues and Challenges of Bangladesh Agriculture: Planning Commission
(i) Dominance of cereal food production: The National Agriculture Policy1999,
National Agriculture Policy Plan of Action 2004, and other major crop sector
policy documents mainly focus on food production, especially rice production,
paying lesser attention to vegetables, fruits and flowers.
(ii) Inadequate progress with diversification and commercialization.
(iii) Lack of modernization of soil and water testing.
(iv) Lack of modern form of production-contract farming and value chain.
(v) Absence of farm and non-farm linkage.
(vi) Absence of demanding technology to co-opt with climate change.
(vii)Volatility in the price of agricultural products, which is a barrier for farmers to
decide on the crop for cultivation in the following season/year.
(viii) Very little stress to agro-based industrialization.

51

(ix) Depletion of soil health/soil fertility.

(x) Depletion of underground water table.
(xi) Unplanned development of infrastructure (dam, road, etc.) blocking drainage.
(xii)Non-zonal based cultivation and lack of development of market chain.
(xiii) Overlapping of irrigation units with less command area, causing loss of
underground water and resulting in depletion of ground water table.
(xiv) Overdose of chemical fertilizer by the farmers is a threat to soil health.
Source:Sixth Five Year Plan, Part-2, Sector Strategies, Programs and
Policies, Planning Commission, Government of Bangladesh.

(g)Inter-Ministry Cross-Cutting Issues and Co-ordination

The policies and programs of a LM/Division may be integrally related to those of the
related ones. In order to ensure convergence ofall policies and programs forinclusive
growth and development, it is necessary to ensure effective linkage and consistency
among these policies and programs.
The Bangladesh Country Investment Plan (CIP) 16 for Agriculture, Food Security
and Nutrition,prepared jointly by various Line Ministries and Divisions and endorsed by the
Government of Bangladesh on 14 June 2010 provides an example of inter-and intraministry linkages with regard to a coherent set of priority investment programs to improve
food security and nutrition in an integrated manner.
CIP for Agriculture, Food Security and Investment is a comprehensive plan and
aims to: (i) invest resources in a coordinated manner; (ii) increase convergence and
alignment of budget and external sources of funding, and(iii) mobilize additional
resources. The investment in this case relate to strengthening of physical and institutional
infrastructure in the field of agriculture, water management, fishery, livestock, agricultural
marketing, food management, nutrition, and food security.
The CIP builds on the foundation of the existing policy, strategy and plan in support
of food security. It is based on Accelerated Poverty Reduction II (December 2009), Draft
Perspective Plan (2010-2021), Draft Sixth Five Year Plan (2010-2015), the National Food

16Bangladesh Country Investment Plan, A Road Map Towards Investment in Agriculture, Food Security
and Nutrition, pp.1-158, Ministry of Food and Disaster Management, Government of the Peoples
Republic of Bangladesh, June 2011.

52

Policy (NFP 2006)17, sectoral policy documents18 and the 2010 monitoring report of the
NFP-PoA.19
The Ministry of Agriculture, related LMs/ Divisions and various Departments and
Agencies under it are associated with the implementation of a number of programs/subprograms formulated under the CIP for Agriculture, Food Security and Nutrition.

1726 areas of intervention contained in the National Food Policy- Plan of Action (NFA-PoA 20082009).
18Sector policy documents include the national seed policy, flood action plan, national extension
policy, livestock sector road map (2006), the fisheries sector road map (2006), the national disaster
management plan (2007-2015) and the Bangladesh Climate Change Strategy and Action Plan
(2009).

19The preparation of the NFP-PoAis inclusive, and the result of joint effort by the following Line Ministries/
Divisions: (i) Ministry of Agriculture, (ii) Ministry of Chittagong Hill Tracts Affairs, (iii) Ministry of Environment
and Forests, (iv) Ministry of Finance, (v) Ministry of Fisheries and Livestock, (vi) Ministry of Food and
Disaster Management (Food Division and DMR Division), (vii) Ministry of Health and Family Welfare, (viii)
Ministry of Industries, (ix) Ministry of Local Government, Rural Development and Cooperatives, (x) Ministry of
Land, (xi) Ministry of Social Welfare, (xii) Ministry of Water Resources, (xiii) Ministry of Women and Children
Affairs. It is in consultation with private sector representatives, civil societyorganizations, NGOs, farmer
groups and organizations, representatives from research andacademia and the Bangladesh Development
Partners such as FAO, USAID and the European Union.

53

Section 10
Vision, Mission, Strategic Objectives and Ministry Level Outcome/Output

(a)Vision
The LM/Division should prepare avision statement. It is adescription of the situation where
the LM/Division intends to be in the near future. The year 2021, being the terminal year of
the vision document of the Government of Bangladesh and also of the Perspective Plan,
is generally set as the dateline. The statement represents a shared sense of direction on
the basis of core values or work ethics. The vision statement should be outcome-based,
clear, inspiring and realistic. The LM/Division has to devise a vision statement with which
they are comfortable. Please describe the vision statement of the LM/Division. It should
not be too long.
(b) Mission
The LM/Division should prepare a mission statement. The mission statementbrings the
LM/Division into focus. It explains why the LM/Division exists, what it does (i.e. its core
business), who it serves (i.e. stakeholders) and what makes it unique (in other words,
justification for its existence). It is therefore, a succinct expression of theraison d'tre of an
organization. It induces the development of the strategic objective, outcome and output,
which are essential ingredients of the MTSBP. The mission statement usually serves as
an on-going guide without a time-frame, and therefore, should be short and be easily
internalized and recalled by staff. Please describe briefly the mission statement of the
LM/Division following the definition given in Box 10.1.

Box 10.1
Definition of Mission Statement
Mission Statement: It is a succinct expression of an organisations reason for existence and serves
as an on-going guide without a time-frame. To develop a clear mission statement the LM/Division
should consider:
(i) thepurpose of the LM/Division; what it intends to achieve.
(ii) by what broad areas of operation will the LM/Division do this, and
(iii) whoare the intended beneficiaries?
Source: Budget Circular-1, Finance Division.

54

(c)

Core Values/Guiding Principles

The core values/guiding principles are enduring ethical standards that a LM/Division
believes and its staff hold in common and endeavors to put into action. Core values
inspire individuals to believe that some activities are legitimate or correct and that others
are illegitimate or wrong.
(d)
Formulation of Vision/Mission Statement
The vision and mission statement should be developed in a participatory way either in a
workshop, consultative meeting or a retreat involving senior management or focus group
on the basis of the LM/Divisions key mandate, statutory requirement, core value, major
business and relation with key stakeholders. In general, vision and mission statement
should not be revised during the medium-term planning periodeven if it is realized
subsequently that these have scope for improvement. The revision should be made when
the MTSBP is reviewed, updated and modified, which is usually the third year of its
operation.
Box 10.2
Vision, Mission, Core Values of the Ministry of Agriculture
Vision
Achieving food security for all.
Mission
Ensure Food security by increasing production, productivity in the crop sector, improving
marketing system as well as diversification of crops and encouraging production of more
nutritious crops
Core Values/ Guiding Principles
Attitude: The team is professional, reliable and fully dedicated.
Drive: The team is driven by principle to maintain high standard of performance and to deliver
excellent services for all stakeholders.
Fairness: It actswith objectivity, honesty, empathy, integrity, accountability and transparency.
Focus: The focus is to achieve agricultural and rural development and food security for all.
Learning: We have open mind and believe in learning and sharing knowledge and information.
Teamwork: We cooperate with one another and our partners to achieve our goals.

55

The Ministry Budget Framework (MBF) provides the mission statement for the LM/
Division. These statements have been significantly improved in the budget for 2012-13.
We can use the mission statement as contained in the MBF. The vision statement and
core values of a LM/Division can be placed with it. As an example,thevision, mission and
core values for the Ministry of Agriculture adopted in the formulation of its MTSBP are
given in Box 10.2.

(e)

Strategic Objective

In the literature of strategic planning, the definition of goal and objective has been
debated.20Goal is a broad long-term aim of a budgetary agency that defines desired result
associated with identified strategy. For example, Goal-1 under the Millennium
Development Goals (MDGs) aims at eradicating extreme poverty and hunger by the year
2015. Objective, on the other hand, is a clear and measurable statement of an outcome
that a LM/Division desires to achieve over the planning horizon.
Budget Circular-1 (BC-1) for preparation of the Ministry Budget Framework (MBF)
uses the nomenclature strategic objective. Induced by this, we would classify goal and
objective under one category and define them as strategic objective. Then, we equate this
with the same strategic objective identified undertheMBF. BC-1 for the preparation of the
MBF directs LM/Divisions to set out the key strategic objectives for the ministry/division
as a whole. These should be derived and summarised from the Perspective Plan 20102021, Sixth Five Year Plan (2011-2015) and/or ministry/sector policy documents.The list
of strategic objectives may be kept short by combining the closely related objectives.If
necessary, some modification may be made to the strategic objectives specified under the
MBF.
Developing sound strategic objectives may be challenging, especially for
institutions that do not provide direct services and are instead involved in co-ordination,
governance, policy making, etc. A sound strategic objective has the following attributes:
(i) Describes a broad achievement, which is shared and accepted by key
stakeholders.
(ii) Outcome or impact oriented and not outputoriented.
(iii) Contribute towards meeting the LM/Divisions shared vision and mission.
20In the South Africa Strategic Planning Framework, Strategic Objectives link upwards to Strategic
Goals and downwards to Strategies, while in the USA framework strategic goals mean strategic
objectives and link upwards to Mission/ Vision and downwards to means and strategies.
56

(iv) Covers major function and operation of the LM/Division.

(v) Consistent with higher levelframework, policy and cross cutting issues.
(vi) Identifies, where possible the clientswho receive the benefits.
(vii)Be expressed in simple, clear, non-technicallanguage.
(viii)
Covers key issues and development challenges identified during the
situation analysis.
The vision and mission statement should remain unchanged during the period of the
MTSBP. In case there is a felt need to update the strategic objective(arising from the
experience gained during the implementation of the MTSBP), it could be done, preferably
at the time of its review. Some of the factors which could possibly trigger a change in the
strategic objective during the course of the MTSBP are given below as a guide.
(i) It is difficult to measure and monitor outcome due to lack of data.
(ii) The stakeholders are not satisfied with the original objectives.
(iii) The scope of the objectives was inadequate.
(iv) Strategic objectives were overly ambitious given available resources.
(f)Desirable Strategic Action
After specifying strategic objectives, it would be necessary to identifydesirable actions by
the implementing agencies to achieve them. It is also necessary to establish linkage
between strategic objective and policy document, i.e. to identify the concerned policy
document which drives the strategic objective. An example is provided from the MTSBP
prepared for the Ministry of Agriculture, and is given in Table 10.1.

Table 10.1
Major Strategic Objective,Relevant Policy Document,Desirable Action and
implementing Department/Agency in the MTSBP for Ministry of Agriculture
57

Major
Strategic
Objective

Relevant Policy
Document (National
and Ministry/Division
level)

Enhance

production
and

productivity
of crops

Vision

Perspective Plan
(2010-2021
Sixth
Five Year Plan
(2011-2015)

Increase coverage of cultivable

land under high yielding and hybrid
varieties

Raise cropping intensity by

spread of short duration and hybrid
multiple cropping

Enhance rice production and

yield through a breeding strategy focusing
on grain quality, shorter maturity and hybrid
and/or super rice

National

Integrated Pest
Management Policy

National
Seed Policy of

Bangladesh

Small scale
Irrigation Policy

Policy for the

Innovation of
climate resilience
and short duration

variety crops and

technologies

Enhance adaptive research and

development activities and effective

research-extension linkagefor agricultural

development
Review and strengthen

agricultural extension system and services

National
Agriculture Policy
New
Agricultural
Extension Policy

Implementing
Department/Agency

Citizens
charter

2021

Desirable Action

Pursue balanced development

of cereal and other crops
Reduction of pre-harvest and
post-harvest crop losses
Targeted food security
programs
programs
Increasing awareness about
food value and nutrition through
publications, meetings and workshops

Bangladesh Rice
Research Institute
Bangladesh Institute of
Nuclear Agriculture
Bangladesh Agricultural
Research Institute
Bangladesh Agriculture
Research Council
Bangladesh Jute
Research Institute
Bangladesh Sugarcane
Research Institute
Cotton Development
Board
Department of Agricultural
Extension
Bangladesh Applied Nutrition
and Human Resources
Development Board

Bangladesh Agriculture
Development Corporation

Seeds Certification
Agency

Agriculture Information
Service

Barendra Multipurpose
Development Authority

Crop-specific development

Secretariat

Strengthen monitoring and

evaluation system

Policy for the

determination of
irrigation charge rate
National

Jute Policy

(g)

Line Ministry/Division Level Outcome/Output

Please begin with the Ministry/Division-level outcome/output as indicated in the Ministry

Budget Framework (MBF). For example, the MBF of the Ministry of Agriculture identifies

58

the following output and outcome as a result of implementation of specified activities

related to the medium-term objective.
(i) Innovation of technology and improved variety of crops
(ii) Expansion of soil sample testing facility
(iii) Expansion of minor irrigation facilities on arable land
(iv) Production of crop:Rice, Wheat, Pulses, Maize
(v) Production of cash crop:Jute,Cotton, Sugarcane, Oil seeds, Potato, Spices
(h)

Performance Indicator

The performance indicator measures what an agency or department intend to achieve

within the fiscal year. The range of such indicator can be wide, from simple indicator such
as quantity or value of goods and services produced within a period to complex indicator
such as efficiency and effectiveness of service delivery. The literature generally mention
four primary types of performance indicator namely, input, output, efficiency, outcome/
effectiveness. These are explained in Table 10.2.
Table 10.2
Performance Indicators
Type of Indicator

Definition

Example

Input Indicator

Measure of

resources employed

Output Indicator

Quantity of goods
and services
provided to the
society

Efficiency Indicator
(value for money)

Effectiveness/
outcome Indicator

Employees required
Goods and services used
Equipment needed

Number of project

Quantity of output

Number of people served

Cost per liter of water delivered.

Cost of garbage collected.

The degree to which

the intended

objectives of the
public goods and

services are being

met.

Cost per student in school

Cost per unit of

output

Increase in the literacy rate

Increase in employment
Decrease in crime rate

59

Reduction of poverty.

Reduction of infant mortality rate

Reduction of maternal mortality
rate

The input indicator addresses the amount of resources used in providing a service
and the output indicator describes the quantity and quality of goods to be produced or
services to be delivered. The efficiency indicator relates input to output or outcome. For
example, the cost of delivery of a liter of water to a household may be treated as an
indicator of efficiency. It may be noted that the evidence of productivity trend may be
gathered from the time-series information of the efficiency indicator. Effectiveness/
outcome indicator is used to evaluate the impact or benefit to be gained, or the
effectiveness of public service delivery. However, effectiveness/ outcome indicator is
sometimes difficult to use as it is not possible to establish a direct link between the service
provided and the measured result.Besides, measurement of this technique is time
consuming.
The performance indicator should be a quantifiable measure and designed to
compare the performance to meetthe strategic and operational goal of the LM/Division. As
a rule, the indicator should be able to reflect the strategic and operational goal embedded
in the programme/ project/ activity of the LM/Division, and specifically, evaluate the
success of the LM/Division towards meeting the strategic goal. The indicator should be
chosen judiciously for it may vary between LM/Divisions, depending upon their
deliverables. In other words, the performance indicator should be chosen in such a
manner that they best reflect the strategic and operational goal of the LM/Division.

Table 10.3
Desirable Characteristics of Good Indicators
S
M

Specific
Measurable

Achievable

Relevant

The indicator is clearly and easily defined.

The indicator is easily quantifiable from available
data and information.
The indicator targets are realistically set so that
these can be achieved and are not mere wish list.
The indicator is relevant and appropriate for the
objectives.
60

Time bound

There is a clear timeframe for achieving the

target, preferably within a fiscal year.

C
R
E
A
M

Clear
Realistic
Economic
Adequate
Monitorable

Precise, unambiguous, tangible and quantifiable

Achievable and meaningful
Available at reasonable cost and in time
Provides sufficient basis to assess performance
Amenable to impartial/objective evaluation

The criteria for choosing the key performance indicators (KPIs) related to input,
output and outcome should be such that they are both SMART (i.e. simple, measurable,
achievable, relevant and timely) as well as CREAM (i.e. clear, realistic, economic,
adequate and monitorable).Table 10.3 gives the CREAM and SMART criteria. It may be
noted that they are not mutually exclusive, and overlap to some extent.
(i)

Past Trend of Key Performance Indicators (KPIs) related to LM/ Division

In connection with the revision and updating of the Ministry Budget Framework (MBF) of
the LM/ Division, the Finance Division, Ministry of Finance, has presented a format
forpreparation Key Performance Indicators (KPIs).21This has been adapted for the MTSBP
by marginally altering the input requirement for their construction. Table 10.4 gives the
template for the construction of the Key Performance Indicators for a Line Ministry/
Division.
Table 10.4
KPIs for LM/ Division required under MBF

Indicator
1
1.

Related
Strategic
Objective

Unit of
Measurement

Actual:
Previous
Years
4

Base
Year
Target
5

MTSBP Period

Base
Year
Actual

Year
1

Year
2

Year
3

Year
4

Year
5

10

11

2.
3.
4.
5.
6.

The construction of typical key performance indicators (KPIs) in the MTSBP as

indicated in Table 10.4 may be described for clarity.

21Budget Circular 1, Section 5, Finance Division, Ministry of Finance, Budget Wing, Section 1,
Government of the Peoples Republic of Bangladesh, dated 20.11.2012.

61

(i) Column 1: Identify the key performance indicators (KPIs) for the Line
Ministry/Division. It refers to outcome or higher level output against which progress
towards attainment of the strategic objectives can be assessed. The number of
KPIs may be between 4 and 6.
(ii) Column 2: Specify the Related Strategic Objectives.
(iii) Column 3: Specify and describe the unit of measurement for the indicator.
(iv) Column 4: Specify the actual value for the previous years. There is no hard and
fast rule about the number of years for which the past record of the indicator has to
be seen. For trend analysis, it may be necessary to gather the data for the past
nine years. In most cases, past two to three years data is sufficient.
(v) Column 5 and 6: Specify the existing target value and actual (or revised target)
value for the base year of the MTSBP.
(vi) Columns 7 to 11: Specify the medium-term target values for five years of the
MTSBP.
The KPIsindicated in the MBF for the LM/Division is used as the starting point. Two kinds
of departures are made from the MBF formulation to arrive at the KPIs in the MTSBP.
First, the past trend of theKPIs is analyzed to examine their pattern of movement. Analysis
of past nine or ten years data would be sufficient in this context. This would help to
indicate the baseline and future targets for KPIs in a systematic manner. As an example,
the Template for past trend of KPIs for the Ministry of Agriculture is indicated in Table
10.5.
Table 10.5
Past trend of Output KPIs related to the Ministry of Agriculture
Previous Years Output
KPIs

Related
Strategic
Objectiv
e

Unit of
measur
e-ment

Year Year
1
2

Year
3

Year
4

Year
5

Year
6

Trend CV
growth
rate
Year
7

Year
8

Year
9

1
2
3
4
5
6
7
8
9
10
11
12
13
14
Production
1. Rice
2. Wheat
3. Pulses
4. Oilseeds
5. Maize
6. Jute
7. Cotton
8. Sugarcane
9. Potato
10. Spices
N.B.: CV = Coefficient of variation = 100 * SD/ AM, where SD = standard deviation and AM = arithmetic mean of a
variable. CV indicates the degree of variability/ stability.

62

The second departure from the MBF in this context arises from the treatment of
input in the MTSBP. The MBF is more concerned with the outcome/ output indicators to
judge the performance of expenditure, irrespective of the composition of physical inputs.
The MTSBP being concerned with planning has to recognize the importance of input
planning, which in other words means availability and utilization of input, and to judge their
productivity and efficiency.
In view of the role of input planning in the MTSBP, the past trend of major inputs
has to be analyzed. The Public Financial Management (PFM) guidelines issued by the
Asian Development Bank,22 World Bank23 and OECD24also prescribe that in medium-term
strategic planning the key performance indicators may include suitable indicator for inputs,
intermediate outputs, outputs and outcomes.
As an example, the analysis on the past trend of inputs as used in the MTSBP for the
Ministry of Agriculture is given in Table10.6.

Table 10.6
Past trend of Input KPIs related to Ministry of Agriculture
Previous Years Input
KPIs

Related Unit of
Strategic measure
Objectives -ment
2

Year Year
1
2
4

Year
3
6

Year
4

7
Crop Area

Trend
growth
rate

Year
5

Year
6

Year
7

Year
8

Year
9

10

11

12

Irrigated
land
Fertilizer
Pesticides
Use of Quality Seed
Paddy

22Chapter 15, Strengthening Performance in Public Expenditure Management, pp.1-32, in

Managing Government Expenditure, by Salvatore Schiavo-Campo and Daniel Tommasi, the Asian
Development Bank, April 1999.

23 Annex D: Performance Indicators for Public Financial Management, pp.136-143, in Public

Expenditure Management Handbook, pp.1-193, World Bank, Washington D.C., June 1998.

24 For examples of performance indicators see pp.136-138, pp.365-367 and pp.463-465 in Managing
Public Expenditure- A Reference Book for Transition Countries, pp.1-497, edited by Richard Allen and
Daniel Tommasi, OECD, 2001. Also see: Rebecca Simson, Natasha Sharma & Imran Aziz (2011): A
guide to public financial management literature: For practitioners in developing countries, Overseas
Development Institute, London.

63

CV

Previous Years Input

KPIs

Related Unit of
Strategic measure
Objectives -ment

Year Year
1
2

Year
3

Year
4

Year
5

Year
6

Trend
growth
rate
Year
7

Year
8

CV

Year
9

Wheat
Jute
N.B.: CV = Coefficient of variation = 100 * SD/ AM, where SD = standard deviation and AM = arithmetic mean. CV
indicates the degree of variability/ stability.

(j)

Projection of Key Performance Indicators

The methodology for projection of Key Performance Indicators (KPIs) should be specific to
the LM/Division in the sense that it should be able to capture the functional relationship
between input and output in the process of production of goods and delivery of services.
An example may be cited from the MTSBP for the Ministry of Agriculture. In order to
achievefood security, it is essential to estimate demand for foodgrains on the basis of
demographic profile,level and trend of income, consumption pattern and basic needs of
the population. Foodgrains are used as input in the food processing industry, hotel and
restaurants and as feed for animal husbandry, fishery and poultry. Foodgrains are also
used as seed in agriculture and as buffer stock. It is necessary to estimate demand for
foodgrains for each of these sub-sectors.
There are alternative ways of projecting the Key Performance Indicators (KPIs).
Generally, the projection is made from both time-series and cross-section data using
statistical and econometric method. Some of these techniques, such as the historical
growth rate and the elasticity, intensity, per capita and density approach, considered
appropriate for estimating the trend in input and output KPIs are described below.
Historical Growth Rate
Thehistorical growth rateof a particular variable can be derived in a number of ways.There
are three widely used approaches in this regard. These are: (i) time trend growth rate
obtained from the least squares regression method, (ii) exponential time trend growth rate
obtained from the base and terminal year values of the indicator, and (iii) simple average
of the annual growth rates. Here, (i) requires estimation from an econometric model; (ii)
and (iii) are rather simple and do not require estimation of a regression model. The Key
Performance Indicators (KPIs) for both inputs and outputs are projected on the basis of

64

the historical growth rates25 adjusted for large variations, if any. These three standard
statistical techniquesare described below.

Time Trend Growth Rate obtained from Least Squares Regression (TRGR):
The IMF (International Monetary Fund) uses this method to forecast the estimate of
country growth rates (for theWorld Economic Outlook, WEO), wherever there is past data
for at least nine years (i.e. at least nine observations). The nine-year periodicity is
considered to yield a reliable estimate of the growth rate. The least-squares growth rate, r,
is estimated by fitting a linear regression trend line to the logarithmic annual values of the
variable in the relevant period. The regression equation takes the form:
Ln Yt= a + bt

(1)

which is equivalent to the following compound growth equation,

Yt= Yo(1 + r)t
In equation (1), Y is the variable, tis time, r is the trend growth rate, Ln is the natural
logarithm of the variable whose growth rate is being computed (which in this case is Y).
If b* is the leastsquares estimate of bin equation (1), then the average annual growth rate,
r, is obtained as:
r = [exp(b*) 1] and is multiplied by 100 to express it as a percentage.
The calculated growth rate is an average rate that is representative of the growth of
available observations over the entire period. It does not necessarily match the actual
growth rate between any two years.
Although the IMF uses this equation to estimate growth rate when the number of
observations (data points) is at least nine, the equation can be estimated with six or more
observations and the resultant growth rate of this equation can be used for projecting the
KPIs provided the goodness of fit of the estimated equation is reasonably high and the tstatistic (value) of the regression parameter (of the equation) is statistically significant.With
six observations, there are four degrees of freedom and this should not prevent the

25 These are standardmethod used in statistics and econometrics for projecting a variable on the basis of past time
series data. Usually, when the time trend is a good-fit, the observed growth rate provides a reliable estimate for the future
growth rate.

65

parameters to be statistically significant. To remember, thereis no hard and fast rule that
the equation cannot be estimated when the number of observations is less than nine.

Exponential Growth Rate(EXPGR)

The exponential growth rate for a variable between two points of time is calculated from
the following equation:
r = Ln (Yn /Y1)/(n-1)and is multiplied by 100 to express it as a percentage.
Here, YnandY1 are the terminal and the base year observation during the period (in other
words, the last and the first observation, respectively), n is the total number of
observations during the period (it could be month or year, depending upon the periodicity
of the data), and Ln is the natural logarithm operator. This growth rate is based on a
model of continuous and exponential growth between two points in time. It does not take
into account the intermediate values of the series.
Average of Annual Growth Rates (AVEGR)
The average annual growth rate () = GRi/n
GRi= 100 * ((Yi / Yi-1)-1))for i=1, 2, n for the past n years.
SD = (GRi- ) / n
CV = 100 * SD/
Where GRi= Growth rate for the i-th year,
SD = Standard Deviation,
CV = Coefficient of Variation.
Year-wise Projection of KPIs for the Planning Horizon
The projected growth rate (PGR) for a KPI during the planning period is assumed to be
the minimum of the three (historical) growth rates mentioned above, namely (i) Time Trend
Growth Rate obtained from Least Squares Regression (TRGR), (ii) Exponential Growth
Rate (EXPGR) and (iii) Average of Annual Growth Rates (AVEGR).Therefore,
PGR = Minimum (TRGR, EXPGR, AVEGR)
Thus KPIifor the t-th year is projected by the following formula:
KPIit = KPI2009 (1+0.01*PGR)t
Here the KPI for the year 2009 is the latest data and is known.
Elasticity Approach

66

Estimate a two-variable double log i.e. log-linear equation using the indicator value as the
dependent variable and an economic factor as explanatory variable.
Let, Y = Indicator variable,
X = Explanatory variable,
Ln = Natural logarithm operator.
The explanatory variable can be GDP, consumption, investment, population or any other
variable which is presumed to influence the indicator variable.
In the following double-log or log-linear equation is the elasticity of the variable Y with
respect to the variable X.
Ln (Yit) = + Ln (Xt)

(2)

The regression coefficient in equation (2) yields the elasticity of a variable with respect
to the other. Using the results of equation (2), the value of the indicator can be projected if
the elasticity () and the future growth rate of the variable X are known. In equation (2), X
is the explanatory variable and is chosen in such a manner that it can influence the
indicator variable, i.e. the Key Performance Indicator (KPI).
This is known as elasticity approach as the projected value of the indicator variable is
determined from the elasticity and the value of a variable which is known to influence the
indicator variable.
Intensity Approach
This is explained with an example. The ratio of a variable to say, GDP is defined as the
intensity. As for example, energy consumption per unit of GDP is the energy intensity of
GDP.
With Energy Consumption = E, the energy intensity is defined as:
Energy Intensity = E/ GDP
The energy consumption can be projected for future if the energy intensity and the future
GDP are known.
Per Capita Approach
Per capita consumption equals consumption per unit of population. The consumption of
goods and services for future can be estimated if the future population size and desirable
per capita consumption are known.
Density per Square Kilometer of Area
Density is estimated by dividing the total number or quantity of a particular variable by
square kilometers of total area. For variables such as telephone connection, electricity
transmission lines, construction of road etc. density may be used to project the future
demand.
67

After deciding the projection technique, the projection of output and input KPIs have
to be prepared. As an example, the Template based on the MTSBP for the Ministry of
Agriculture is given in Table 10.7.
Table 10.7
Projection of Input and Output KPIs for LM/Division: An Example from the MTSBP for
Ministry of Agriculture

Indicator
1

Related
Strategic
Objectiv
e
2

Unit of
Measuremen
t
3

Base
Year
Target

Base
Year
Actual

4
5
A. Production

MTSBP KPI Target

Year
1

Year 2

Year 3

Year 4

Year 5

10

Rice
Wheat
Pulse
Oilseed
Maize
Jute
Cotton
Sugarcane
Potato
Spices
B. Input
Crop area
Irrigated land
Fertilizer
Pesticides
Quality seed
Paddy seed
Wheat seed
Jute seed
Column 1: Identify input and output KPIs which relate to strategic objectives.
Column 2: Specify the related strategic objectives.
Column 3: Specify the unit of measurement.
Column 4: Specify the base year target
Column 5: Specify the base year actual.
Column 6 to 10: Specify the KPIs for the five years of the MTSBP

Section 11
Programs, Projects and Financing Need

(a)

Identification of Programs/Projects/Activities

Please indicate the proposed (on-going as well as new and planned) programs/ projects/
activities to achieve the strategic objectives. All the Agencies/ Departments need to have
hard thinking and conceive feasible and desirable projects/ programs for the medium-term
planning period on the basis of policies, strategies, planning document, country studies
and reports by the development partners, and internal and external research reports.
68

The programs/ projects/ activities may be listed separately in terms of their

characterisation such as: (i) on-going, (ii) proposed, (iii) processed, (iv) in the pipeline, (v)
under pre-feasibility studies, (vi) under approval by the Planning Commission, etc.

(b)

Prioritization of Programs/ Projects/ Activities

The programs/projects/activities should be grouped as Top Priority (TP), Medium

Priority (MP)and Low Priority (LP). It is desirable that within each of these three
categories (i.e. top, medium and low), the programs and projects be ranked in descending
order of priority. Such prioritisation of programs/projects may be done through top-down
and bottom-up approach, assessing thespread and duration of their impact. The
government policies on poverty eradication and empowerment of women can be factored
in assessing the spread of the programs and projects. The number of poor persons being
benefitted and share of women among the beneficiaries of these programs and projects
can be factored in their prioritisation.
The impact of the programs and projects in terms of duration may also be factored
in the prioritisation. It should take into account the periodicity of the impact such as shortterm or long-term. If the programs and projects yield one-time benefit under the social
safety net, it should be considered as an example of short-term impact. On the contrary,
the programs and projects responsible for efficiency enhancement, training, micro-credit,
public investment can be considered to have long-term impact. The regional character of
the programs and projects may be considered in their prioritisation. There is considerable
regional disparity in growth and development, which is mirrored in the levels of living and
quality of life of the population. Much of this disparity is rooted in the historical
inequalitiesand can be corrected through appropriate prioritisation of programs and
projects across regions.
There is an element of prioritisation of projects/ programs/ activities in the Budget
Circular issued by the Finance Division (for development and non-development Budget)
and by the Planning Commission (for development projects). These may also be used to
prioritise the projects/ programs/ activities. Under the Medium Term Budget Framework
(MTBF), completion of on-going projects/ programs/ activities are given priority and the
unapprovedones may be included only when these have been technically conceived,
pipelined, prepared (pre-feasibility studies, cost-benefit analysis) and appraised by the
Planning Commission.
69

The projects/ programs/ activities in the Ministry Budget Framework (MBF)of the
LM/ Division are chosen within the financial ceiling indicated by the Finance Division.
Similar financial ceiling is not contemplated in the selection of projects/ programs/
activities in the MTSBP. The MTSBP incorporates both on-going and new projects and
programs so as to permit their strategic assessment and selectionbased on the priority as
assessed by the LMs/ Divisions, Finance Division and the Planning Commission during
the budget process. In other words, there is no limit on the total expenditure while
incorporating the projects/ programs/ activities in the MTSBP. However, proposed
expenditure need to be realistic on the basis of past experience and absorption capacity
of the Agencies and Departments under the LM/Division. The LM/Division has to be
realistic about the expenditure while selecting the projects/ programs/ activities.

(c)

Policy Choice for Implementation of Programs/Projects/Activities

The planning and budgeting experts of the LM/Division are expected to attach due
importance to identification of potential source to finance the projects/ programs/ activities.
With regard to the source of financing of the projects/ programmes/ activities in the
MTSBP, the alternative policy options are:
(i) Public Sector, i.e. the Government
(ii) Private Sector and NGO Participation
(iii) Public-Private Partnership (PPP)
(iv) Projects/Programs supported by donor/development partner
The Government has put in place a policy of encouraging public-private partnership and
private investment including foreign direct investment. These should be assiduously
pursued by the LM/Division.
(d)

Costing of Programs/Projects/Activities and Source of Finance

In the MTSBP, the consolidated cost of the projects/programs/activities has to be

estimated. Besides, it should contain the possible source of financing the project/
programme. These along with their life-span and priority should be provided in the format
given in Table 11.1.
Table 11.1
Life-span, Priority and Year wise Costing of Programs/ Projects

70

Name of the
Programme/
Projects

Year of
Total
starting and Projec
completion t cost
(Taka
in
lakh)

Expendi
ture
upto
June
2012

Year wise Project cost (Taka in lakh)

(Taka
in
lakh)
Year 1

Year 2

Year 3

1.
2.

71

Year 4

Year 5

Dominant
strategic
objective
and major
activities

Dominant
output

Priority
Sources
(Top/Medium/Lo
of
w) and probable Financing
year of
commencement
during the
MTSBP

Section 12
Annual Performance Plan
The Annual Performance Plan (APP) presents the performance indicator of the program/
project/ activity together with target. It indicates the performance target that a budgetary
agency aims to achieve in the budget year and in the next four years in pursuit of
outcomeoriented strategic objectives set out in its MTBSP.
This section should ideally start with a brief discussion on the institutional set-up
for the implementation of programs/ projects/ activities, a review of the recent
development in the operational environment, link of the annual budget to achievement of
the strategic objectives and outcomes and recent achievement of the organization.
Thereafter it should present the yearly target for key performance parameters (output
indicator) for the project/ program/ activity for each Agency and Department including the
Secretariat under the Line Ministry/Division.
(a) Agency/Department-wise Dominant Performance Parameters for Programs/
Projects/ Activities with Baseline and Yearly Targets for Five Years
Please note that the following information has to be provided for each Department/Agency
(including the Secretariat) under the Line Ministry/Division.
(i)

Recent Achievement

Please provide a brief account of the major achievements in the recent past and the
expected performance during the current budget year. The description should include
recent data and be able to spell out clearly the scope and scale of the activities
undertaken. It should be brief, to the point, and in any case, not too long.
(ii)

Institutional set up for implementation of projects/ programs/ activities.

(iii)

Recent changes, if any, in the operational environment.

(iv)

Activity and Outputfor the Secretariat

The documents published by the Secretariat may be regarded as its output. 26 These may
be indicated with exact time schedule for their preparation and publication within the
planning horizon. The documents are: Action/ Operational/ Business Plan, Budget,
26In most of the MBFs, the Secretariat does not provide the list of outputs/ outcomes.

72

Statistics, Yearbook, Annual Report, Policy Document, Report of Working Group, Expert
Committee, etc.; planned amendments of existing Acts, Laws, Regulations, etc.; new Acts,
Laws, etc.; projects/ programs related to capacity building, training, data management,
management and information system, conducting surveys, etc.27
The annual performance indicators of the activities, output indicators and targets may be
provided as per the format in Table 12.1.
Table 12.1
Annual Performance Indicators
(Activities, Output Indicators and Targets)
Medium Term Targets

Output
Activitie
s

Indicato
r

Revised Target

Actual

Target

Revised Target

Year 1 Year 2

Related Strategic Objectives Unit of measurement

2010-11

2010-11 2011-12

Year 3 Year 4Year 5

2011-12

10

11

12

1.
2.
3.

(b)
Please

Broad Procurement Plan for Five Years

provide

the

information

on

procurement

plan

for

each

Agency

and

Departmentunder the LM/ Division as indicated in Table 12.2. It should also include the
Secretariat of the LM/Division.

Table 12.2
Annual Procurement Plan: Physical and Financial

27In Output Budgeting of OECD countries, these documents are regarded as outputs because these are
available to public at large for discussion, debate, analysis, research leading to value addition and
improvement of general social welfare. Many of these documents are presented to the Parliament of the
country.

73

13

Secretariat/
Agency/
Department

Major
assets
to be
procure
d

Medium Term Targets

Year 1

Year 2

Year 3

Year 4

Year 5

Unit

1.

PH

FIN

PH

2.

3.

N.B.: PH = Physical; FIN = Financial.

74

FIN

PH

FIN

PH

FIN

PH

FIN

Section 13
Monitoring and Evaluation

(a)

Monitoring Mechanism

The on-going projects/ programs/ activities in the MTSBP (Medium Term Strategy and
Business Plan) require regular monitoring in order to maintain the timeline and prevent
slippages. Monitoring is an integral part of the MTSBP and performance based budgeting.
It focuses on tracking the progress of an activity and assessing the quality of goods and
services provided by the Line Ministry (LM)/ Division.
Monitoring is a part of the project implementation, and is kept distinct from the
evaluation of projects. The monitoring is specific to project, programs and activity. The
evaluation is conducted for homogeneous projects and programs so that experience
gained from the process of generation of output and outcome can be factored in the
planning for future.
The monitoring system covers the different stages of the programme cycle,
beginning from identification of project/ programs/ activityand ending with delivery of
output. For each stage, the monitoring mechanism generates timely report on progress,
on the state of cost and time, so as to enable the authorities to initiate measures for
arresting time and cost over-run. Monitoring of output and outcome permits judging the
efficiency (by comparing actual output with budgeted output) and effectiveness (by
comparing actual outcome with budgeted outcome) of the projects/ programs/ activities.
This is in addition to the internal and external monitoring of the on-going development
projects and programs for the LM/ Division. The internal monitoring is conducted by the
administrative division of the LM/ Division in areas of financial and physical progress of
development projects included in the Annual Development Programme (ADP). The
external monitoring of the development projects/ programs included in the ADP is
conducted by the Implementation Monitoring and Evaluation Division (IMED) of the
Ministry of Planning.
Monitoring involves collection of relevant data and preparing report on the
progress of the project/ programme/ activity on regular basis. The reports are presented to
the policy makers and budget officers for review and taking appropriate policy measure.
The reports are also used to update the MTSBP and prepare next years budget.

Output Group and Indicator for Quantity and Quality

75

It is necessary to devise the indicator for assessment of the quantity and quality of
output/outcome. Keeping in view the draft on manpower and financial resources, it is
advisable to keep the number of outcome and output for monitoring in the LM/ Division as
minimum as possible. Much of it would depend on the number of output/outcome to be
monitored. Smaller number of outcome/output would make the task manageable from the
point of view of ensuring the quality and effectiveness of monitoring.28
Having decided the output group, it becomes necessary to specify the category,
quantity, quality and cost for each output. This can be done with the help of the policy
documents, economic review and similar report prepared and published by the LM/
Division, the surveys conducted, etc. which are tangible, quantifiableand monitorable
overtime.29
Support Service
The LM/Division may undertake the following initiatives to support the monitoring
activities.
(i)Establish a comprehensive database:

A comprehensive data base management

system is the key to an efficient and effective monitoring framework. Consistent and timely
availability of statistics are important for performance-based medium-term planning and
budgeting and effective policy formulation. The LM/Division in collaboration with the
Bangladesh Bureau of Statistics may strengthen the institutional set-up and mechanism
for designing and conducting an appropriate survey for collection of necessary and
reliable statistics in time. They may also enhance their capacity on data collection, data
warehousing and retrieval, collation, analysis and dissemination to ensure ownership and
legitimacy of the data.
(ii)

Establish monitoring and evaluation structure:

The monitoring structure of the

MTSBP is critical to the realization of the targets set in the Medium Term Budgeting. The
LM/ Division may develop the necessary structure and system to support monitoring of the
28It is a practice followed in the Australian Budget.
29In this respect, the Australian Budget which is brief and to the point, can be a case in example. For
performance information relating to output on Domestic Economic Policy Advice and Forecasting, Australian
Budget indicates that (1) advice on economic policy and the economic outlook meets Treasury Portfolio
Ministers needs in administering their responsibilities and implementing government decisions that
contribute to a sound domestic economy. (2) Effective presentation of budget documents and other
publications to adequately inform public debate.

76

MTSBP. Adedicated monitoring unit may be identified in the Planning Wing to coordinate
and undertake the monitoring activity in the Agencies and Departments under the LM/
Division.
(iii)

Approval of Monitoring Report: The monitoring report is required to be reviewed

and approved by the Budget Management Committee (BMC) chaired by the Secretary of
the LM/Division. The report should then be approved by the Honble Minister in-charge of
the LM/ Division, and thereafter be placed in the Parliament for wider dissemination.

(b)

Evaluation of Projects/Programs/Activities

There are three types of evaluation depending on the evaluation of actual input, output
and outcome in relation to planned (or budgeted) input, output and outcome. The
comparison of actual input with planned input (both financial and physical) determines
(financial/ physical) compliance. The comparison of actual output with planned output
determines the efficiency of a project. The comparison of actual outcome with planned
outcome determines the effectiveness of a project.
An evaluation methodology is proposed here by way of illustration. This, however,
may not be treated as rigid or mandatory for the LM/Division. The methodology is based
on determination of scores of the individual Key Performance Parameters. The
performance indicator for output/outcome developed for the LM/ Division and each
Department/ Agency are made available to the Project Directors and the concerned
authorities charged with the implementation of the strategic plan and for monitoring and
evaluation. At the end of the year, achievement of target is reviewed and scores are given
for individual KPIs (Key Performance Indicators). A composite index may be estimated as
weighted average of individual scores. There is no hard and fast rule about the choice of
weights to the KPIs, but it should be so assigned that the aggregate add up to 100. The
mark (score) for input/ output/ outcome KPIs can be assigned in the following manner.
(i) A score of 100 is awarded if the actual output/KPI equals 100% or more of the planned
output/ KPI;
(ii) If the actual output/KPI falls below the planned output/outcome/ KPI, then the score
would be awarded as: 100 - Actual Output/ Targeted Outcome.
The procedure of calculating marks (score) for input/ output/ outcome KPIs is
detailed in Table13.1for clarity.
77

Table13.1
Proposed Marks (Scores) for Input/ Output/ Outcome KPIs for Monitoring and
Evaluation

Actual Achievement of Output/ Outcome/ KPI

Score

(a) If the actual achievement of the output/outcome KPI

equals 100 per cent or more of the planned
output/outcome KPI.
(b) If the actual achievement of the output/outcome KPI falls
below the planned/budgeted target of the output/ outcome/
KPI.

100

100 multiplied by the Actual

Output/ Outcome KPI
divided by the Targeted
Output/ Outcome KPI

After calculating scores for individual KPI as indicated in Table 13.1,

theperformance of KPIs can be rated by the LM/Division as per the rating systemindicated
in Table 13.2.As in the case of determination of scores/ marks, the rating system should
not be treated as rigid.
Table13.2
Rating of KPIs on the Basis of Scores
Rating of Agency/ Department/ Secretariat/
Ministry

Range of Score
(in percentage)

(a) Excellent

80 100

(b) Very Good

70 79

(c) Good

60 69

(d) Average

50 59

(e) Poor

Less than 50

After assigning marks for all outputs/KPIs for an Agency/ Department/ Secretariat,
weighted average of marks is taken as the score of the Agency/ Department/ Secretariat.

78

Finally, weighted average of scores of all Agency/ Department/ Secretariat is taken as the
overall score for the LM/ Division.
(c)

Management Information System (MIS)

The establishment of a sound and effective Management Information System (MIS) is the
basic requirement in monitoring the implementation of projects/ programs/ activities in the
MTSBP. The Secretariat and all Agencies/ Departments are required to put in place an
effective MIS that would yield data for monitoring of the KPIs of the Secretariat and
theoutputs of Agencies and Departments.
(d)

Dissemination of Rating

The ratingof Agencies/Departments/Secretariat/LM/Division with regard to different

performance categories may be placed on the Government website so that the general
public and the stakeholdersare informed and there is general debate and discussion. The
overall rating for each may be made available along with the detailed methodology and
parameters. It is not necessary to publish the actual performance score for each output or
KPI.

79

Section 14
Relevance of MTSBP in the Medium Term BudgetFramework (MTBF)
There is considerable amount of confusion around the necessity and usefulness of the
Medium Term Strategy and Business Plan (MTSBP) when the Medium Term
BudgetFramework (MTBF) is fully in place. The five-yearperiodicity of both the MTSBP
and the MTBF added to this confusion. 30 The moot question is: whether MTSBP is
subsumed in the MTBF. The necessity and usefulness, or in other words, the relevance of
MTSBP in the context of economic growth and development of Bangladeshis described in
this section to clear the smoke.
Thereliance on market for accelerating the pace of economic growth and
development has made the approach to planning more in the nature of indicative type.
This is true about the present economic set-up of Bangladesh, wherethe Government
outlines the strategy for growth and development and the supporting policy environment. It
decides the growth target for macro-parameters and to some extent its sectoral pattern. In
order to realize the growth target the Government ensures adequate investment. The
investment originates in both public and private sector. The allocation of investment
between sectors is a job that in the present circumstances has largely been left to the
market forces. The Government tries to meet the goals and objectives of development by
investing directly on the projects/ programs/ activities in the public sector and giving broad
guidance to the private sector about the actual decision to invest.
In the above schematic presentation, the government restricts its activities to
setout the dimensions of economic development and growth in the country and postulates
the macroeconomic features, such as resources, savings, investment, the GDP growth,
and other broader economic and social requirement. This requires laying out a
programme of investment and activities to steer the countrys economy in the desired
direction, a task which at the moment is being implemented in part through the MTBF. The
MTBF is a detailed description of the allocation of funds for different sectoral activities in
the Government. The sanction of Government expenditure is done through the annual
budget, which takes into account the developmental and non-developmental expenditure,
the cornerstone of growth and development. The annual allocation of Government
resources and expenditure is made keeping the MTBF in view. The MTBF makes some
tentative provision for the next four years (at present, two years) from the budget year.
30The periodicity of MTBF has since been changed to three years.
80

The MTSBP is introduced at this backdrop. It has a five-year periodicity, and this is
often confused with the five years of the MTBF, the budget year, and the four forward
years. The MTBF has a list of projects/ programs/ activities, which is financed by the
annual budget; so is the scheme of things in MTSBP. Such a situation often raises the
question: why MTSBP.
The answer principally lies in the fact that plan and budget are two different
concepts, and have to be developed and formulated in different ways. The implementation
of proposals in the plan is made through the budget. But,the budget cannot be a substitute
of the plan. The plan is formulated in a holistic manner through a process of discussion
and review at various levels of the Government and the private sector. The budget, and
that includes the MTBF, falls short of that. The MTBF despite its four forward years
expenditure profile cannot complement the planning process (far less with two years now)
which ideally should yield the project profile. The reasons are explained for clarity.
The MTSBP is a strategically conceived and determined plan. It is a plan in its
entirety. The basic modality of selecting the projects/ programs/ activities in the MTSBP
involves discussion among various stakeholders, which includes the representatives of
the concerned Line Ministry/Division, the Agencies and Departments associated with it,
and often the academia, private sector, think-tanks, NGOs, etc. These projects/ programs/
activities, cover the economic sectors (such as agriculture, etc.), the material production
sectors (such as, goods, services, transportation, power, etc.) and social sectors (such as,
education, health, water supply, sanitation facilities, welfare, poverty alleviation programs,
etc.) and are designed to attain the strategic objectives of the LM/ Division, which are
important national priorities.
The government does not directly implement all the projects/ programs/ activities
for impacting upon the developmental process.In many areas, particularly in the economic
and material production sectors, the investment decisions are left to the private sector or a
combination of the public and private sector, that is PPP mode. In these
investmentdecisions, the planning process takes a long-term view whereas the budget
takes a short-term view. This marks an integral difference between the Plan and
theBudget.
The MTBF despite its four forward year allocations cannot take a long-term view
as it is mere allocation of funds keeping in mind mainly the resources availability.Though
attempts are made in the MTBF to establish linkage between budgetary allocation and
strategic objective, policy and priority of the Government, its decisionsare more influenced
by available supplies and demand in a limited time horizon. It is because the MTBF, like
81

any budgetary process, aims to balanceexpenditure with resource availability. The reality
is that many of theinvestment decisions have long-term consequence. In whichever area
society has to take a long-term view, planning becomes necessary. Herein lies the
importance of MTSBP, which is a plan document, formulated taking into account the
medium- and long-term consequence of investmentin pursuance of the goals and
strategies within the accepted paradigmsthat is, the predominance of market in the
economy.The MTSBP does just that.
The relevance of MTSBP in this contextlies in building the foundation for high and
sustainable growth trajectory for the medium- and long-term, a task essential to elevate
the economy from low-income to middle-income category with minimum amount of
investment and within shortest possible time. The perspective plan of Bangladesh targets
such a transition within twelve years. The high growth rate is also essential to create
social infrastructure for human development and to meet the strategy of poverty reduction
andempowerment of women in economic and social sphere. The growth and development
in the country is not regionally balanced. High growth becomes a necessity to achieve a
certain degree of regional balance of income and output. The MTBF,in isolation, is
incapable of performing these roles. The MTSBP can guide the country for achieving
these objectives.
An example may be cited with the MTSBP for agriculture sector and demonstrating
how it makes a difference from the MTBF.
The livelihood of a large majority of the population in Bangladesh depends on
agriculture and allied sectors. As a rule, maximization of agricultural growth is essential to
raise the level of income and employment of the rural population. What is necessary in
this context is broad-based agricultural development. This requires a long-term view,
which only a planning agency can take. It is not possible for the budgetary agency to
formulate a holistic plan for agriculture which will be able to transform the levels of living
and quality of life of the rural population. The reason is that agricultural growth presupposes investment in irrigation and rural roads in a planned manner; marketing facilities
is necessary for remunerative prices of agricultural products. These are all areas, which
require a long-term view and the MTBF is not destined to handle. Moreover, the feasibility
of levels and growth of production of important agricultural commodities is checked in the
MTSBP. The feasibility of agricultural output targets is determined in relation to type of
land use, availability of irrigation and fertilizer application levels, with the help of the
parameters relating to cropping intensity, area under irrigation, etc. These are all planningrelated issues and remain beyond the scope of the MTBF.
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The dependence on market for growth and development pre-supposes the need
for well-functioning market. But, there may be circumstances in which markets may not
exist or, even if they do, may not work efficiently and effectively. This is especially true in
case of Bangladesh. Mere budgetary allocation through the MTBF would not guarantee a
well-functioning and developed market where both big and small players can participate
equally. Unbridled operation of market forces may give rise to outcomes which may be
deleterious when seen in a broader national and social perspective. MTBF is not destined
to tackle these issues. Planned intervention is required to direct the state policy and public
action where markets are likely to be imperfect. This is essential for Bangladesh.
One of the principal tasks of planning in a market oriented economy is to identify
the areas of emerging vulnerabilities and to suggest measures to address them. It is
essential to placate the problem areas within the wider macroeconomic context and
provide direction to specific policies. Short-run fire-fighting measures which are essential
characteristics of a budgetary process (MTBF being no exception) can lead the economy
in undesirable direction. These issues need a long-term view and are ideally handled by
the planning agency of the country.

83

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Glossary
Accountability-Obligation to demonstrate that work has been conducted in compliance
with agreed rules, regulations, procedures and standards (including performance
measures)
Activity-actions taken or works performed or processes undertaken in order to produce
an output with the help of given inputs/ resources
Appraisal-an overall assessment of the relevance, feasibility and potential sustainability
of a project/ program prior to a decision to undertake or fund it
Asset-A tangible good over which ownership rights are enforced by agencies, and from
which economic benefits are derived by its owners by holding it or using it over a period of
time.
Baseline Indicator Value- historical value of an indicator at an associated date.
Benchmark-A measured, best-in-class achievement, a reference, a norm for
comparison; recognized as the standard of excellence for anactivity. A benchmark often
refers to the performance achieved in the recent past by comparable agencies under
similar situations.
Budgetary Agency- An Agency/ Unit financed by the legislative budget of its government.
Capacity Building-a process leading to either(i) skill upgrading, (ii) procedural
improvement and (iii) institutional strengthening. It refers to investment in people,
institutions, and ICT.
Capital- Also called equity. Money invested in the business by the owners.
Capital grant- A voluntary transfer from one government/ international body to another in
the form of cash that the recipient is expected to use to acquire assets other than
inventories and cash or the cancellation of a liability by mutual agreement by creditor and
debtor or the assumption by one unit of a debt of the other unit.
Capital transfer-A transfer of a non-cash asset, the cancellation of a liability by mutual
agreement between the creditor and debtor, the transfer of cash that was raised by
disposing of an asset, the transfer of cash that the recipient is expected to use for the
acquisition of an asset, or the assumption by one unit of a debt of the other unit. But,
inventories are excluded.

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Compensation of employees- The total remuneration, in cash or in kind, payable to an

employee for work done during the accounting period, except for work connected with
own-account capital formation. It consists of wages, salaries and social contributions
made on behalf of employees to social insurance schemes. Excluded are amounts
payable to contractors, self-employed outworkers, and other workers who are not
employees.
Compliance- the extent to which actual utilization of resources (time, money, manpower,
ICT and other resources) corresponds to planned/ budgeted resources.
Consumption of fixed capital-The decline during an accounting period in the value of
fixed assets, major improvements to land, and the costs of ownership transfer incurred on
the acquisition of valuables and non-produced assets as a result of physical deterioration,
normal obsolescence, or normal accidental damage. It is based on the average prices of
the assets for the period. Changes in the assets value due to changes in the price of the
asset are excluded.
Contingency-A condition that may affect the financial position of the government
depending onthe occurrence or nonoccurrence of one or more future events.
Contingencies are not treated as financial assets or liabilities because they are not
unconditional claims or obligations.
Contingent liability-A contingency that will result in a liability if it occurs. Examples are
guarantees of debts of other units and the obligations of social security schemes.
Core competencies-Strategic business capabilities that provide an institution with certain
advantages among similar group.
Economy-absence of waste (in terms of time, money, manpower, ICT and other
resources) during the production of a given output. An activity is economical when the
costs of the scarce resources used approximately the minimum required.
Effect-intended or unintended change directly or indirectly due to an intervention.
Effectiveness-the extent to which in intended outcomes of a project/ program are
achieved, or are expected to be achieved, taking into account their relative importance.
Efficiency-A measure of how economically resources/ inputs (funds, expertise, time, ICT
etc.) are converted into outputs or results.
Evaluation- a periodic assessment of the efficiency, effectiveness, impact, sustainability
and relevance in the context of stated objectives.
Feedback- transmission of findings generated through the evaluation process to parties
for whom it is relevant and useful so as to facilitate learning. This may involve the
collection and dissemination of findings, conclusions, recommendations and lessons from
experience.
Goal-a statement concerning the successful realization of an impact.
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Governance-the system, procedures and ways in which power and authority influence
public life, especially economic and social development.
Impact-A long term significant development change from the use of resources or long
term effect of a program on the society. Impact may be direct or indirect, intended or
unintended.
Implementation-Specific tasks that will make a strategy into a reality or help to execute a
project/ program/ activity.
Indicator-a number having a particular measurement purpose.A Quantitative or
qualitative factor or variable that provides a simple and reliable means to measure
achievemen.
Input-the financial, human, physical and ICT resources used during the completion of an
activity to produce some outputs.
Logframe-a strategic planning tool used to improve the design of projects/ programs. It
involves identifying strategic elements (inputs, outputs, outcomes, impact) and their
causal relationships, indicators, and the assumptions or risks that may influence success
and failure. It thus facilitates planning, execution and evaluation of a project/ program.
Milestone- a step used to identify significant events in a schedule, such as the completion
of a major phase within a particular deadline. An activity singled out for special monitoring
in terms of progress or completion. The milestone selected should be indicative of a larger
process.
Mission-A mission statement defines briefly the purpose of a LM consistent with its broad
operations and intended beneficiaries. An agency's medium term strategic goals and
Ministry level outcomes flow from the mission statement.
Model-An approximation to reality with major characteristics.A description, representation,
or analogy that is used to help visualize something that cannot be directly understood.
Monitoring- a continuing function that uses systematic collection of data on specified
indicators to provide management of an ongoing project with indications of the extent of
progress, constraints to achieve targets and progress in the use of allocated funds.
Networking- A decentralized organization of independent participants who develop a
degree of interdependence and share a coherent set of values and interests.
Objective- a broad statement of what is to be achieved and the improvements to be
made. An objective describes an intended outcome and explains why a series of actions
will be taken.
Outcome-medium/ long term concrete benefits provided to the community or clients as a
result of the use of a service (or output). Examples include increased literacy due to better
education system and reduction of poverty ratio due to employment generation programs.
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Output- final goods and services provided to external clients (the community or a section
of the community) from the activities, programs and projects carried out by departments/
agencies. Outputs are relevant to the achievement of outcomes.
Performance-the degree to which an implementer operates according to specific criteria/
standards/ guidelines or achieves results in accordance with stated objectives or plans.
Process- how something is done or activities are performed.
Process evaluation-an evaluation of the internal dynamics of implementing agencies,
their policy instruments, service delivery system, management practices and their
linkages.
Programme-A time-bound integrated group of activities/ projects that contribute to a
particular objective or produce the same output/ outcome.
Relevance-the extent to which the objectives of an intervention are consistent with
beneficiaries requirements, country needs, global priorities and policies.
Results- the output, outcome or impact (intended or unintended, positive and/or negative)
of a development intervention.
Results Chain- the causal sequence for an intervention that stipulates the necessary
sequence to achieve desired objectives, beginning with inputs, moving through activities
and outputs, and culminating in outcomes, impacts, and feedback.
Results-Based Management (RBM)-a management strategy focusing on performance
and achievement of outputs, outcomes and impacts.
Risk analysis- an analysis of factors which are likely to affect the successful achievement
of a project. It provides detailed examination of the potential unwanted and negative
consequences to human life, health, property, or the environment posed by interventions.
SMART- stands for: Specific, Measurable, Achievable, Realistic and Timely; desirable
qualities of a performance indicator.
Stakeholders-those who have an interest (either direct or indirect) in an institution, its
activities and achievements.These may include clients or customers, partners,
employees, shareholders/ owners, government agencies or regulators.
Strategy- The plans and means to achieve the goal for a particular objective.
Strategic planning-A road map to achieve strategic goals that define business objectives
for critical success factors.
Sustainability- the continuation of benefits from an activity after the activity has been
completed, the probability of continued long-term benefits, the resilience to risk of the net
benefit flows over time.
Target- the goods or services produced over a given period of time, by an agency in order
to
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achieve its objectives. A strategic planning target may correspond to an output or

outcome.
Use of goods and services- The value of goods and services used by an agency for the
production of other goods and services, with the exception of goods and services used in
the production of assets as own-account capital formation. Also included is the value of
goods purchased for resale less the net change in inventories of work in progress,
finished goods, and goods held for resale. The value of goods and services acquired for
in-kind transfers to households or as grants are excluded because they are not used in a
production process.
Vision-The achievable dream of what an organization wants to do and where it wants to
go.
Wages and salaries-All compensation of employees except for social contribution by
employers. Included is payment in cash or in kind. Social contribution paid by deduction
from employees wages and salaries are included in wages and salaries. Excluded is the
reimbursement of expenditure made by employees in order to enable them to take up
their job. Also excluded is the social benefit paid by employers.

91