Financing Budgets in Kenya
Presentation during a workshop
on Innovative Financing for the
Water Sector
Elizabeth Nzyoka ,Principal
Economist-Treasury
Introduction
• The Government of Kenya promulgated a
new constitution on 27th August 2010.
• The new Constitution has fundamental
effects on Public Finance Management
and specifically the budget process.
Key changes to the Budget
Process
•
Commission on Revenue Allocation(art 215)
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Make recommendations on equitable share of
revenue raised by national govrt
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Between national and county governments
Among county governments
Equalization Fund-one half of recent audited
revenues(art 204)
– Equity in development
Key changes to the Budget
Process Cont.
Budget Process for the County
Governments(art 224)
•
County governments to prepare and adopt
their own budgets and appropriation
National and County Functions-4th Schedule
•
Distribution of functions between national and
county governments
County assembly
• Approve plans and policies of county
governments
Stages of Budgeting
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Planning
Formulation
Consolidation
Approval
Implementation
Accounting
Audit
Stages of Budgeting: Planning
Stage
• National vision-Vision 2030-19 sectors
• Water and sanitation sector
• National plans- MTP 2008-2012construction of water projects
Stages of Budgeting: Planning
Stage (2)
• The ministry of water and other
implementing agencies develop their
strategic plans based on the national MTP
• Exercice cordinated by the ministry of
planning to coordinate the planning
process
Stages of Budgeting: Formulation
• Setting of broad fiscal parameters for the
Medium Term that is consistent with
Government policies and plans. –fiscal
policies
• Include:
– Total domestic revenue
• Tax revenue and non tax revenue
– Total external borrowing
• Loans and grants
– Total available resources=total expenditures
Stages of Budgeting:
Formulation(2)
• develop strategic policy priorities to be
implemented by the government in the
medium term.
• should provide indicative resource
available for the water sector among other
national government sector ceilings
• These strategies will be submitted to
cabinet for approval
Stages of Budgeting:
Formulation(3)
Development of sector budget proposal
• Water and sanitation and environment Sector
Working Group embark on developing sector
budget proposal in line with the policies set out
in the budget outlook paper
• Mainly through consultations with line ministries
and public participation
• All sub units under a line ministry should
participate.
Stages of Budgeting:
Formulation(4)
Development of Budget Policy Statement
• Firming up of the fiscal framework
• Consideration of budget proposals from the
sector working group
• CRA to provide recommendations on equitable
share of revenue
• Develop allocation of revenue bill
– National and county
– Among county governments
Stages in budgeting:formulation
• Bills to take into account the budget
proposals
• Submission of bills to parliament for
approval
Stages of Budgeting:
Formulation(5)
Determination of Revenue Allocation
• The National Assembly will determine the
allocations between the county and national
government.
Determination of the basis for revenue
allocation among counties
• The senate will determine the mechanism for the
revenue allocation between counties to ensure
they all achieve same objective.
Stages of Budgeting:
Formulation(6)
Development of and approval of Allocation
Bills
• The BPS will include draft bills indicating the
proposed allocation of revenue between the
levels of Government and the allocation among
county governments
Development of Ceiling at Accounting Unit
Level.
• The National Treasury will develop ceilings for
the accounting units based on the approved
ceilings while the county Treasury will develop
ceilings to the country accounting units.
Stages of Budgeting:
Formulation(7)
Preparation of Budget Estimates
• The accounting units will embark on preparation
of itemized/program budgets based on the
ceilings provided.
Submission of Budget Estimates
• The Executive, Judiciary and Parliament will
each submit the budget estimates to the
National Assembly two months before the end of
each financial year for approval while the County
Executive will submit to the county assembly for
approval.
Approval(1)
Review of Submission
• The National and County assemblies will
each review the budget estimates through
their relevant committees. The review will
include participation of the public and
other stakeholders.
Approval(2)
• Preparation and approval of the Vote on
Account
• If the appropriation Act will not have been
assented to by the beginning of the financial
year, the National Treasury will prepare a vote
on account for approval by the National
Assembly and the County Treasury will submit to
the County Assembly to authorize the spending
of the Accounting units.
Approval(3)
Approval of Estimates
• The National Treasury will develop an
Appropriation Bill for approval of the Estimates
by the National assembly while the County
Treasury will develop county Appropriation Bill
for approval by the County Assembly.
Development of Appropriation Act
• The National Treasury will develop an
Appropriation Act for the national estimates
while the County Treasury will prepare the
appropriation Act for the county estimates.
Approval(4)
Development and approval of the
Supplementary Budgets
• The National executive, Judiciary and
Parliament will develop supplementary budget to
fund unforeseen and emergence expenditures
during the budget preparation
• The supplementary budget will be submitted by
the Treasury to the National Assembly for
approval
Implementation
Development and submission of in year
performance reports
• The National Treasury, Judiciary,
Parliament and Controller of Budget will
develop in year performance reports and
submit by 45th day of the subsequent
quarter for review by the National
assembly.
Reporting
End Year reporting and auditing
• The
National Executive, Judiciary,
Parliament and County Executive will
prepare and submit final accounts to the
auditor general for review and processing
Accounting and Audit
Preparation and Submission of the final
accounts
• The auditor general will prepare and submit the
end year final accounts to the National Assembly
while the accounts of the Auditor General will be
and submitted to a professional accountant for
review and recommendation.
• The auditor general will submit the audited
accounts to Parliament and County assemblies
for review
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