Special Paper No. 09 of 2005 on Review of the Government of Kenya 2004/05 Budget

Abstract

The budget for fiscal year 2004/ 05 is the second budget in the implementation of the Economic Recovery Strategy for Wealth and Employment Creation (ERSWEC) 2003-2007 and fourth under the Medium Term Expenditure Framework (MTEF) budget process. This budget review examines the extent to which the budget addresses poverty and ERSWEC priorities; the (in) consistencies within the budgetary processes, especially the fiscal strategy and the annual budget; and the weak budget implementation as evidenced in divergences between budget and its actual execution; and makes policy recommendations on how the budget process can be strengthened to enhance budget outcomes. This analysis focuses on three key areas: (i) the budget-making process in Kenya with emphasis on weaknesses that contribute to less than optimal results; (ii) macroeconomic analysis of the budget in relation with the observed divergences between the ERSWEC policy priorities, the Fiscal Strategy Paper (FSP) and the annual budget; and (iii) the poverty orientation of the budget.