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

484 Alta Fölscher
macroeconomic outlook and the macrofiscal framework and provides a
sector-by-sector discussion of recent fiscal performance, priorities, constraints,
expenditure allocations, and performance indicators and targets.
The paper is prepared by the Ministry of Finance and provides the final
ministry ceilings for the preparation of the annual estimates. As such, it is
discussed and approved by the cabinet.
The BOPA and the BSP are important fiscal transparency instruments
in Kenya. Currently, the budget estimates themselves are still published in
the detailed administrative and line-item format only. The only narrative
information provided with the documentation package of the annual
budget is the budget speech. The BSP, therefore, provides the only reference
for external stakeholders to track how the allocations are related to spending
priorities. Also, both the BOPA and the BSP impose discipline on the budget
preparation process. The BOPA firms up the macrofiscal decisions, placing
a firm ceiling on spending aggregates. The BSP provides the next decisionmaking
platform: firm ministerial ceilings on which the annual budget
preparation is based. Currently, however, the budget classification format
makes tracking allocations at the subministerial level between the BSP and
the annual budget very difficult.
preparing the annual budget. The preparation of
detailed estimates commences when ministerial ceilings have been fixed
through the SWG and BSP process. At this point, budget preparation still
slips far too easily back into incremental line-item budgeting. The process
revolves through several phases, with increasing involvement of more senior
officials in the Ministry of Finance, and with involvement of the line ministries
in the first two phases only. At the line-ministry level, proposals for the
detailed estimates are prepared by budget and finance officers, often with
insufficient consultation with planning officers and program managers.
Because the budget and finance officials were not necessarily involved in the
earlier phases of the MTEF process, the default process focuses on inputs and
on existing spending pressures. It does not necessarily carry through any of
the strategic prioritization that had been done in the preceding MTEF phase
of budget preparation. The archaic and, at times, arbitrary ministry-specific
budget classification does not facilitate easily tracking BSP commitments
through to the annual estimates, leaving budget officers little option but to
revert to more narrow, line-item-oriented allocation methodologies. As the
annual estimates are taken through the Ministry of Finance review process,
further decisions are made that relate to more traditional input-driven