Public Sector Governance and Accountability Series: Budgeting and ...

466 Alta Fölscher
between policy and planning are not only a result of problems in budget
preparation, but also a result of deficiencies in budget execution, monitoring,
and audit.
The reforms included the following:
Strengthening the legal framework for finance management, including
new financial management and procurement legislation
Developing macroeconomic forecasting capacity in the Ministry of
Finance
Developing a participatory MTEF-budget process, with various structures
aimed at improving coordination between agencies and cooperation
toward better budget outcomes
Introducing review and evaluation instruments, particularly institutionalized
ministerial public expenditure reviews, an overall public expenditure
review, and public expenditure tracking methodologies
Constituting central and ministerial MTEF structures to improve the link
between planning and budgeting
Reforming economic budget classification categories to comply with
international standards
Developing an integrated financial management information system
Introducing automated payroll controls
Creating a revamped cash management and expenditure commitment
control system
Improving systems to track and monitor external resources
Improving debt management capacity.
The reforms are applied in the relevant phases of the budget process. This
chapter focuses on the institutional arrangements of the budget preparation
and implementation processes, discussing each reform instrument within the
context of the budget process.
Improving the Macrofiscal Budget Link
A key finding of analytical work done on the Kenyan system in the early
2000s was that although previous reform initiatives emphasized the need for
realistic projections of revenue, overly optimistic forecasts of macroeconomic
and revenue performance still regularly led to budget planning
based on unrealistic resource envelopes. The result has been in-year cash-flow
shortfalls, leading to (a) repetitive budgeting during the year as both the
Ministry of Finance and spending agencies continuously assess funding