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

Country Case Study: Kenya 497
unusual for returns to reach the Ministry of Finance up to three weeks late
(the deadline being the 15th of every month), and in some instances, returns
have been two months late. Partly, accountability is weak because sanctions—although
provided for in legislation, regulations, and circulars—are
rarely enforced. Although the government has given the Exchequer Committee
a mandate to hold back the release of funds to spending ministries
until they submit their returns, this procedure has not been implemented.
Payroll control and integration between the new payroll and IFMIS systems
are poor.
Although the government recently introduced a new legislative framework
for procurement, including new structures and institutions, the system is
weakened by the lack of further regulations.
Audit reports continue to be late. The scope of the audit office’s mandate
is still too narrow, and its independence needs to be strengthened. A positive
development is the program to change the scope of internal audit
away from preaudit and verification to risk-based and systems audit.
New audit committees have been set up, but guidelines and manuals still
need to be completed.
Milestones and Remaining Challenges
Since 2000, Kenya has embarked on a comprehensive budget reform program
aimed at addressing critical weaknesses in budget formulation, budget
execution, accounting, monitoring, and reporting institutions. The introduction
of MTEF budgeting in 2000/01 was a major reform in budget
planning and formulation. Since then, the budget preparation process has
been strengthened by the introduction of specific instruments within the
MTEF-budget process. A major benefit of the reforms has been a significant
increase in fiscal transparency: stakeholders within and outside of government
have year-on-year access to much more information on policies, allocations,
and spending effectiveness.
However, the process is still plagued by a critical disconnect between the
MTEF phase and the annual budget preparation and by the shortcomings of
the underlying budget structure and classification system. In addition,
despite initial reforms on the budget execution side, budget implementation
discipline is still very weak. These factors underpin difficulties in realizing
political priorities in the budget.
In response, the government of Kenya—together with development
partners—designed a comprehensive approach to further reforms that aims to