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

Country Case Study: Kenya 489
documentation pays attention to these issues in the narratives but tends to
jumble the financial information together in aggregate spending tables. This
practice makes minimizing incrementalism and optimizing reprioritization
very difficult.
Institutional barriers to integrating planning and budgeting
Issues between the Ministry of Finance and the Ministry of Planning and
National Development about who does what in linking planning and
budgeting at the central level interfere with the establishment of a streamlined,
coordinated central process. Both ministries are developing modalities
to link policy making, financing, and monitoring and evaluation of performance—but
separately. Although they do consult, it is often only after
modalities have been developed.
The continued separation of planning and budgeting for investment
and recurrent spending between the development budget and the recurrent
budget, respectively, holds back the effectiveness with which ministries can
plan for the best possible use of available resources in implementing policy
priorities. Although the MTEF process does attempt to integrate the two
budgets, even in the MTEF phase ministries are required to plan for the
two budgets separately. Sector ceilings are broken down into component
development recurrent parts, limiting ministries’ ability to make tradeoffs
between the two in the budget preparation phase. However, they do make
the tradeoffs during the spending year, when money is shifted between
the budgets.
Although some evidence indicates the SWGs function well when they
perceive their tasks to have a meaningful effect on allocations, in some sectors
they remain ineffective. The current SWG setup is problematic insofar
as some ministries are represented in a number of sectors and some important
line items, such as salaries and transfers, are outside of SWGs’ sphere of
influence. These items are still treated incrementally at the central level.
Although the SWGs can be successful as sector-level forums that ensure
policy contestability, the central process through which tradeoffs are made
between sectors (and their component ministries) is too diffuse, and the rules
that govern allocations are not stated clearly enough. Even though the sector
reports are the instrument for proposing new policies, it is not clear what
instrument ministries should use to bring proposals to the sector and what
the formats and criteria should be. The transition from the SWG phase to
the annual budgeting phase is not clean enough, and it is not clear whether
ministries have opportunities earlier and later in the process to influence their
allocations. Finally, the involvement of the cabinet is not frequent enough in
the process to ensure that decisions are perceived as government of Kenya