Discussion Paper No. 77 of 2007 on Governance in Public Expenditure Management: Key Issues and Challenges in Kenya

Abstract

This paper develops a conceptual framework for applying good governance to systems of public expenditure management (PEM), and analyses governance in public expenditure management in Kenya. An overview of some key governance challenges in public expenditure management in Kenya is provided. The framework identifies three key stages in PEM: national budget formulation and preparation; execution and reporting; and monitoring and evaluation. Good governance is one of the principal inputs in the PEM system that is often neglected, particularly with regard to the principles of transparency, accountability, predictability and participation. While the country has made considerable progress in strengthening governance in PEM, this paper argues that various challenges need to be addressed. Some of the key challenges require enhancement of predictability and accountability in budget formulation and preparation. In the ‘bottom up’ process, this can be done through strengthening the legal and administrative framework. The paper also argues that there is room for strengthening the link between monitoring and evaluation, and the budget planning process so as to enhance transparency, accountability and predictability. The adoption of results based management (RBM) systems in PEM has improved accountability and performance but needs to be further institutionalized and properly anchored within the PEM system. While the various PEM reforms that have been initiated have an important bearing on enhancing good governance, the greatest challenge relates to further deepening of the current reforms and continuous improvement.