Kenya has undertaken extensive reforms to its budgeting system following the adoption of the new Constitution.
Previously, the budget making process was a preserve of the Treasury and the political class. The game plan has however changed and public participation in the budget making process is now anchored in the Constitution.
The Treasury has already sought for public participation in this year’s budget-making process, a move many view to have been sparked by the need to avoid a similar beating meted out on the then minister for Finance for exclusion of the public in the 2011/12 budget-making process.
The minister was prevented from making the presentation of the budget speech in Parliament and instead a budget statement was read, which was completely deficient of the traditional pomp and colour that characterised past budget events.
Although the inclusion of the public in the budget-making process is a praiseworthy step given that the public is directly affected by the process both as recipient of services rendered by the government as well as the tax payer, challenges abound regarding the feasibility of such participation.
For instance, is there a mechanism in place to monitor the number of public submissions made? What is the criteria applied in accepting or rejecting the submissions? Is the criterion within the public knowledge?
It may still be too early to celebrate the dawn of public-driven budgeting since the process is riddled with a myriad of challenges ranging from among others infrastructural and financial factors.
Arguably, the country’s budgeting system is likely to remain marred by key weaknesses inherited from the previous system given that it is still under experimentation and the new Constitution dispensation is still ongoing.
Indeed, Kenya’s current budgeting infrastructure remains apparently basic and a lot needs to be done to build it up. Sound reforms in the budgeting system encompasses the entire budgeting cycle:
formulation, approval, implementation and audit. In spite of public inclusion in the budget-making process, Kenya’s budgeting reforms could possibly still be at the first two stages.
The immediate fundamental challenge is the creation of institutional infrastructure suitable for a modern budget process and the polishing up of skills of budget-making stakeholders.
A full understanding of the budget planning and preparation system is essential, not just to derive expenditure projections but to be able to advise policymakers on the feasibility and desirability of specific proposals from a short-term or long-term perspective.
Kenya has in the past applied the bottom-up budget preparation approach which has principally been driven by the requests from the ministries based on their spending.
Without a firm top-down limit, the ministry of Finance could only challenge proposals on technical or policy grounds, rather than in terms of affordability constraints and priorities within a fixed total.
Usually, the deficit arising through this procedure would not be sustainable. Since the country has in the past proven to be perennially over-optimistic in revenue forecasting, realistic revenue projections and the fiscal deficit need to be decided before the budget preparation procedure begins, not at some late stage just before or, worst of all, after its completion.
Those preparing the budget need to ensure that the preparation timetable is sufficient, and the process transparent and comprehensive so that there is no need for arbitrary expenditure cuts late in the process when revenue or borrowing constraints become clear.
Essentially, budgets are documents that express state governments’ power to act. Because budgets have so many functions, the process of writing one is often conflict-ridden, unsatisfactory to observers and participants and flawed in its outcomes.
The central function of a budget – the decision of how much to spend for what – will always create disputes, and no budget will ever satisfy everyone.
Given the number and variety of interests and issues that have to be reconciled for a budget to be completed, the wonder is the ability of the process to move along smoothly year after year.
For many observers, it is the competitiveness, compromises, and incomplete nature of the process that are striking and not the real accomplishment every annual budget represents.
Kenya’s budget making process is likely to be confronted with conflicting interests for some time. Extra patience will thus not be an option before the benefits of a public-driven budgeting process are fully realised.
However, a strong legal and regulatory framework will truly provide a faster workable solution.
The writer is a tax expert with Ernst & Young. firstname.lastname@example.org