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

486 Alta Fölscher
Across and within ministries, therefore, no consistency prevails as to
how budget heads and subheads relate. They can be either administrative
units or quasi-programmatic classifications (such as primary education in
the Ministry of Education). It is therefore difficult to see what money is
being spent on. When reallocations are made, they are usually by line item,
making it difficult to see how adjustments relate to policy priorities.
The government aims to introduce a program-based classification for
the 2007/08 budget. This reform would replace the head and subhead system
of budget classification with a program and subprogram classification structure,
clearly relating to ministerial objectives and identifying key indicators
for each program. For the reform to be successful, however, it would need to
be reflected in a redrafted chart of accounts and implemented in budget
execution through a working integrated financial management information
system (IFMIS).Although the design of programs and performance indicators
and targets is a challenging task in itself, it can be done in a relatively short
time. However, experience elsewhere suggests that implementing program
budgeting without the ability to link it directly in a multidimensional classification
and accounts system to expenditure can be a waste of limited
reform capacity in a government. Kenya still faces significant challenges in
implementing a working IFMIS (see later discussion).
core poverty programs. The concept of core poverty
programs was introduced into the MTEF-budget cycle in 2000/01. The
expenditures are identified within the existing budget classification system
using a set of predetermined criteria. These expenditures are prioritized during
budget preparation and are supposed to be protected from budget cuts
during budget execution. The core poverty list excludes wage expenditure.
Since the introduction of the concept, the core poverty expenditures
have constituted a significant and increasing share of ministerial expenditure.
In 2000/01, the recurrent core poverty program was estimated at
7 percent of nonwage and noninterest expenditure and the development
component at 14 percent of the development budget. By 2003, the recurrent
program accounted for 17 percent of nonwage and noninterest spending
and 25 percent of the development estimates (Republic of Kenya 2003b).
The growth comes from two sources. First, a small portion of it is
attributable to the growth in the original component spending activities on
the program list. Second and more significant, the growth in the program is a
reflection of changes in the original criteria. Transfers to the Local Authority
Transfer Fund and the Road Maintenance Levy Fund—as well as donor funding
for qualifying projects—have increased the program size significantly.