Budget experts have hailed Kenya'splan to adopt Zero-Based Budgeting (ZBB), saying it will help trim expenditure excesses that overwhelm the country's budget.
Reacting to the National Treasury PS Chris Kiptoo, that the government is considering adopting the budget model in the upcoming financial year, most experts who spoke to the Star termed it as a solution to over-borrowing.
The country's total public debt was captured at Sh10.5 trillion in October.
"This is what we have always been suggesting. Lack of accountability has seen us budget for corruption. As a result, the public debt has expanded to almost 70 per cent of GDP,'' Benson Mundia of Accountability Now said.
Instead of relying on the previous year’s budget, ZBB requires one to evaluate and justify every expense from the ground up, justifying its necessity and alignment with strategic goals.
"It’s like starting with a blank canvas and carefully selecting each budget item based on its value and contribution to your financial objectives. This approach ensures that every piece of your budget fits together harmoniously to create a clear and purposeful financial picture'', Mudia said.
Currently, Kenya is using traditional budgeting, where previous spending levels are typically adjusted.
''Kenya needs such radical budget planning to tame wastage. Most of this is under the recurrent budget which accounts for over 70 per cent of the country's total budget,'' economist Job Meyo told the Star on the phone.
According to a report by PBO, the overall budget for the Financial Year 2023/24 is projected to reach Sh3.6 trillion or 22.1 per cent of the Gross Domestic Product (GDP). This is made up of Sh2. 48 trillion in recurrent expenditure and Sh689.1 billion in development expenditure.
The Parliamentary Budget Office (PBO), which advises lawmakers on the economy and budget has been pushing for this budgeting process since last year.
In its report last year, BPO said, if adopted, the current budget will be shelved and a new one crafted from scratch, in a spending plan that will force all vote heads to justify their expenses for each new period.
The fiscal experts told an induction workshop for newly elected lawmakers that zero-based budgeting will ensure that the budgetary requests made by government ministries, departments and agencies are exactly what is needed in a financial year.
The team said there is a feeling most budget items are over-inflated and therefore the need to start budgeting after re-costing all services.
“One of the ways to cut recurrent spending and wasteful expenditures is doing zero-based budgeting. We need for instance to re-cost the amounts needed to maintain an MP for a year and allocate the exact budget,'' the report reads.
The budget advisors wondered why the National Treasury was not adopting the budgeting model despite several promises year in-year out.
“The way forward for Kenya is to drastically reduce the debt momentum by cautiously cutting spending or carefully raising taxes, refinancing, rollover and restructuring of the existing debt burden and faster economic growth,” the PBO said in its brief to lawmakers.
IMF believes that this kind of budgeting will help developing countries improve budget efficiency.
In a white paper published in September, the IMF called on developing nations to adopt the model to tame debt dependency.
While it acknowledges that the model is efficient, it says that the tools needed for analysis and monitoring are expensive.
It is no wonder that the model has succeeded in developed countries including the US, Canada, and Norway among others.
"These spending reviews have been successfully developed and applied in mostly advanced economies but, because they rely on advanced tools of fiscal analysis and established public financial management systems, their application in low- and middle-income countries is more limited,'' IMF says.
Although he agrees that the budget plan is good for a country like Kenya, Jeff Gabbo, an economic scholar at the University of the Witwatersrand says it cannot be implemented as soon as stated.
''That is a good model that requires planning. I do not think Kenya has adequately prepared to implement in the coming budgetary cycle,'' Gabbo said.
Kenya has been toying with the idea of adopting ZBB since 2019 when the then-exchequer boss Henry Rotich presented the idea.
He had indicated that it would help reduce recurrent expenditures, including government wage bills, and domestic and foreign travel expenditures.
This has however not materialised, with the wage bill increasing by an average of Sh46 billion every financial year over the last six years.