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

Country Case Study: Kenya 485
budgeting concerns than to the outcome- and output-driven policy concerns
that guide the MTEF phase.
In the Ministry of Finance review process, ministerial estimates are first
reviewed by the estimates working groups, which consist of officers from the
line ministry, the Budget Supply Department, and the Ministry of Planning
and National Development. The next review of the estimates is by the Budget
Procedure Group, which is chaired by the director of the Budget Supply
Department. The line ministry is not represented in this review, which culminates
in ministerial budget statements. These statements are, in turn,
reviewed by the Budget Steering Committee, which is chaired by the permanent
secretary of the Ministry of Finance. A final step before finalizing the documentation
and laying it before the legislature is seeking cabinet approval.
When the annual budget arrives in the legislature, it therefore contains
decisions on intravote allocations that do not derive fully from the earlier
MTEF processes and that have had insufficient input from line-ministry officials.
This situation causes line ministries to question whether their inputs
have been taken into account adequately. They thus will argue that they are
underfunded by the Ministry of Finance and will therefore find it difficult to
deliver on their mandates. The situation also prompts immediate requests for
reallocations and additional funds. At the political level, the negotiation of
final allocations at the ministerial level is done without sufficient participation
from the cabinet, resulting in low political commitment to the tradeoffs
made. This disconnect between the commitments made by ministries in the
SWG and BSP process and their final detailed allocations is exacerbated by
the tabling in the legislature of the recurrent and development expenditure
estimates without narrative text to clarify how the detailed intraministerial
allocations relate to ministry objectives, priorities, and activities. The MTEF
phase’s emphasis on line ministries being explicit about what they can deliver,
given funding, thus is largely negated by the annual budget phase.
classification reform. Up to the 2005/06 budget, all budget
reforms in Kenya were undertaken using the same underlying budget
structure and budget classification system. The budget was classified by vote,
by budget head and subhead, and subsequently by line item. In 2005, the first
phase of reforms to the budget structure and classifications was undertaken
with the replacement of the line-item classifications with a Government
Finance Statistics Manual 2001–compatible economic classification system
(IMF 2001). However, this one-dimensional reform was grafted onto the
existing head and subhead structure.