Working Paper No. 07 of 2002 on Budget Reforms and the Medium-Term Expenditure Framework in Kenya

Abstract

Many developing countries in Africa introduced planning systems after attaining independence but very little attention was given to budget systems as a tool for achieving plan targets. Recent recognition of the need to link budgets and plans has resulted in a wave of public expenditure management reforms. The latest effort has been the introduction of the Medium-Term Expenditure Framework (MTEF) process to re-orient annual budgets to a medium-term focus. This paper reviews various budget systems and evaluates the strengths of the MTEF process and the threats to its sustained implementation in the context of a developing country like Kenya. Previous reform efforts in Kenya are reviewed and it is observed that these reforms had objectives similar to those of the MTEF approach. The Programme Review and Forward Budget, for instance, was designed to link planning and budgeting and increase efficiency of public expenditure over a three-year horizon. The paper concludes that the MTEF is a powerful tool if fully implemented and adopted as the best practice. However, the MTEF process faces similar obstacles to those that contributed to the failure of past reform initiatives. In particular, the MTEF approach and associated public service reforms require total and sustained political commitment.