This is the fourth edition of the Scottish Government's Medium-Term Financial Strategy. The role of the MTFS is to set out Scotland's fiscal outlook over the next five years, including financial opportunities and risks that may impact our fiscal position. In line with the recommendations of the Budget Process Review Group, the document does not set out new spending plans or explain how prioritisation decisions will be made to meet policy objectives. For capital expenditure, these decisions were made as part of the Capital Spending Review in February 2021. As noted in Chapter 3, a targeted review of the Scottish Government's CSR will be undertaken in early 2022. For resource, these questions will be answered by the publication of a Resource Spending Review alongside the next MTFS in May 2022.
Publication of the Resource Spending Review will mark the first occasion in over a decade where the Scottish Government will have publicly committed to multi-annual spending plans, providing greater clarity and certainty to bodies across the public sector to enable them to plan for the medium-term. The Resource Spending Review Framework, published alongside this MTFS, sets out some of the challenges involved in getting to that point and opens up a public conversation about how these challenges should be managed and resolved.
The challenges highlighted in this MTFS have also highlighted the need for a continued focus on medium-term financial planning. As set out in Chapter 4, we currently have limited levers to manage considerable levels of uncertainty and fiscal risk in order to smooth public expenditure over the medium-term. This means that forecasting, controlling and prioritising expenditure is our primary lever for managing fiscal risk, to enable us better to target our spending decisions in order to tackle some of the more strategic and long-term risks to fiscal sustainability, such as changing demographics and climate change. The upcoming Resource Spending Review will provide an opportunity to set out a clear direction for how this spending can be used most effectively to support our priorities.
The publication of these comprehensive multi-annual spending plans will have implications for the content of the MTFS in the future. We welcome the recommendations made by the Finance and Constitution Committee in the previous session of the Scottish Parliament to review the role, content and purpose of the MTFS. We will work collaboratively with the newly formed Finance and Public Administration committee over the coming months to identify what further improvements can be made to this document, to ensure it continues to play an important role in our budget-setting process.
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