The relationship between budget allocation and spending by ministries in Kenya

Abstract

The fiscal policy in Kenya has remained the most challenging and complex area of macroeconomic management characterized by persistent budget deficits, rising debt burden, persistent low economic growth rates, high interest and inflation rates. In addition, public finance utilization and management has been poor allegedly due to high level of corruption; poor accountability; improper procurement and tendering; over invoicing; wasteful expenditure; lack of discipline and proper work ethics in the public sector; and lack of openness in the budget process. The objective of the study was to establish the relationship between budget allocation and spending by ministries in Kenya. The study adopted a descriptive design and targeted 41 government Ministries. Secondary data was collected from The National Treasury and Controller of Budget for the period between the financial years 2008/09 to 20012/13. The study established that budget allocation strongly influence spending by ministries in Kenya. The amounts of money allocated to the ministries determine the spending priorities and the extent to which the ministries can carry out their mandates. The study recommended that success rates in the expenditure should be considered during budget allocations; government should emphasis on meeting the funding targets that instruct government agencies to limit their budget requests by specific amounts; there should be an integrated financial framework that monitors the link between budget allocation and government spending; government needs to clearly articulate outcomes in the budget allocation process, and develop the internal capability to enable timely and accurate measurement of both the outcomes delivered and the costs incurred and; further research on the implications of devolution on the budgetary process and the spending by government ministries as well as spending by county governments.