The effects of medium term expenditure framework on the budgetary process in Kenya

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Date
2011-08-18
Authors
Kigundu, J. Irungu
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Abstract
The study reported here is a survey of the attitude and opinion of the Government finance managers towards the Public Financial Management reforms (PFMR), with a special emphasis on the effects of Medium Term Expenditure Framework (MTEF) as a budgetary process. To secure long-term economic success, maximize the efficient use of limited public resources, create the highest level of transparency and accountability in government finances and equitably deliver efficient and effective services, reform of ineffective systems, processes and institutions is critical. MTEF was a reform initiative targeting the budgetary process which was bedeviled with various shortcomings. The study arose out of the concern that despite the adoption of MTEF in the financial year 2000/2001, linkage between policy, planning and budgeting is still not evident. The need for the study was also necessitated by varied views from stakeholders that the old traditional (incremental) budgeting was slowly creeping in. There was therefore need to undertake the study and ascertain the situation from those who implement the budget at the ministerial level. The main objective of the study was to determine the effects of MTEF on the budgetary process. MTEF is part of the wider public financial management reforms that have gained ground in most developing countries through the insistence of the World Bank and other donors in pretext of good governance. Theoretical and empirical literature was reviewed extensively in the areas that include: - Public Financial Management Reforms in Kenya, the various budgeting approaches including the traditional (incremental), Zero Based and Activity Based budgeting. Other areas of literature review included the various budgetary reform processes that were prior to MTEF and finally an indepth review of the MTEF and its process. The study methodology was mainly descriptive, and the target population was all the various government ministries that carry out the budgetary process. It was a census study because the ministries are only 40 and hence no need for sampling. Data was collected using a self structured questionnaire, based on Likert (1932) type of scale. The data was coded and analyzed using descriptive statistics. Pie charts, bar charts and comparative tables were used for presentation of the findings. In conclusion the findings of the study reveal that while MTEF is well understood by a majority of the respondents, it is yet to achieve its stated and intended objectives. The prime objective of linking policy, planning and budgeting has not been achieved and respondents fear that the old incremental budgeting has actually taken over despite the tedious MTEF process, mainly due to inadequate revenue inflows and other considerations outside the much talked about Sector Working Groups. The cardinal rule is that budgetary process must be well handled and must always reflect the aspirations of the citizenry. The findings of the study reveal that the indicative outer year MTEF ceilings are unnecessary and should be scrapped. Further it indicates that the MTEF process and its resultant output remain an unsatisfactory tool of achieving public policy objectives as contained in the policy documents preceding the start of MTEF process. The process is almost ritualistic with little regard to the MTEF's stated objectives. It is recommended that further research should be undertaken especially in regard to the way the resource envelope is shared out amongst the various competing needs. Also, it is recommended that further research on the effectiveness of the sector working groups and the resultant sector reports. Respondents hold the opinion that the sector reports despite the enormous amount of work and time that they consume, ultimately they are never seriously regarded during the sharing of resources. These findings should be ascertained through further research on the effectiveness of MTEF sector working groups especially in regard to sharing out the resource envelope
Description
Department of Business Administration, 69p. The HJ 2180.5 .I78 2009
Keywords
Budget process--Kenya
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