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DOCUMENTS OFfICE
FILE COpy
NO TO BE TAKEN OUT
ECONO~IC CO~ooISSION FOR AFRICA :'orkshop on Problems of Budget
Reclassification and Management
Sponsored jointly by the United Nations Economic Commission for Africa, the United Nations Bureau of Teohnical Assistanoe Operations, the Division of Public Administration and the Fiscal and Financial Branch of the Department of Economic
and Social Affairs of the United Nations 4 - 15 September 1962
Addis-Ababa, Ethiopia
BUDGET RECLASSIFICATION IN KENYA
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LIMITED BRlf .1/4
4 September 1961
Prepared by the Economio &Statistios Division, the Treasury, Nairobi
64-2205
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BUDGET RECLASSIFICATION IN KENYA
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1. A r~ql",s8ih.cation of the central government Appropriation Accoun.ts .' is unQertaken by the Economics
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Statistics Division annually, starting 'fi th the financial year 1954-55 when the exchequer system of accounts was Lnfrro duce d in' Kenya , This analysis has the dual object of eliminating internal transfers and this providing series of total revenue and expend- i tur e year by ;yed.r t'r e e of doub Le-ecoun td ng , and of providing a consistent functional classification of expenditure. The Budget Estimates of revenue and expen d'itur-e are analysed on a 'similar basis after approval by the Legislature" T':le reclassified figures are published in the Kenya Statis- tic/l.+.Abstrf\ct uad th~ total figures are reconciled wi th the totals derivedfro~ the AppropI'iation Accounts" A similar analysis of revenue and expend- i turl' is un de r-t.aken by the East African Statistical Department in respe.ct of the East African High Commission Services ex.t en.dd ng over all the
terri tories in East Af:,,;ea.
2. Recently attempts have. been made to extend the K~l'lya analysis in two directions. This additional work was undertaken in the first instance Hi th a vi,r," :to h'ildins ',p Government Sector Accounts for national income purposes, but always wi th the idea in mind that i t would eventually be of use for bUdgetary purposes also, particularly when figures were avail- able for a series of years" At present results of the extended analysis are available for 0ne year only. They have not been publis~ed since ths form of present~tionhas by no means been finalized. It is.noH possible ho wevex, to aSfJ6S8 ho v muoh addi tional analysis can be. made with present staff r-e sour ce s e ven .if the results are provisional and not of practical use ,imm8dL,t61~"
3.' Onedji"3C'~ibn in which the analysis is being extended is to cover local authorities' financial operations. Attention has be~n concentrated on their so-calJed general r-evenue accounts which cover virtually all
current'",XIiendi'ture and a certain amount of capital expenditure. Eventually the capital accounts also will be covered, but this is of less urgency
since all loc~l authorities in Kenya render s~ocial returns of their
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I ; •capital expenditure to the Statist; Gal Department each year. It was decided to·.a,im from the start at a combined economic-functional analysis, and this proved quiy~ practicable in the event.
4. 'Ihe second direction in which the analysis is being extended relates to the central Government's operations. Here the two objects are to pro- duce a cross-classification of expenditure by economic-functional categOries and to draw into the analysis extra-budgetary funds and authori ties. This again proved a practicable undertaking though certain difficulties of consolidation were encountered.
5. In order to give some idea of the scope of the central go vernment
analysis and its relaticnship to the budgstary accounts, two features of the form. of pre.sentation of the budgetary acoounts may be mentioned.
The principles .on ,which extra-budgetary funds are included or excIu de d may also be given briefly:
a) The Colo~y and Development Accounts.
The Kenya bUdget is divided into Colony Account and a Development Account. S~eaking generally, the latter covers expenditure which :it is considered may properly be met from grant or loan funds.
Accordingly it includes substantial provision f'o r expenditure which is finally made from the Colony Account. At the same
time, the Colony Account includes some small provision for develop- ment expenditure. Apart from these inter-Account transfers,
considerable expenditure of a current nature is made directly from the Development Account and, on the other hand, considerable capital expenditure is incurred directly by the Colony Account.
'Ihe division between the Colony and Development Accounts thus bears only a distant relationship to the division between current and capital accounts and is not of great significance for eco- nomic analysis. Since, however, the Colony Development division is firmly established in Kenya's budgetary system, it is neces- sary to analyse each account separately in the economic-functional reclassification and separate figures for each Account are inc- luded even in the main consolidated statement.
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b) App;t:'opriations in Aid!.
Under the exohequer system certain receipts are collected by Ministries and appropriated wi th legislative approval to meet, In part, the collecting Ministry's expenditure, The budgetary tota;Lof expen di ture are ·presented neto·f such Appropriations in Aid. Since Appropriations in Aid cover a ,nder variety of receipts (e,g, some are in the nature of indirect taxes, some charges made to the private sector for services provided, some reimbursements from other branches of government) in order to be able to view the economic effect of Kenya Government operations as a whole, expenditure is analysed in the first place gross of Appropriations in Aid, These latter receipts then have to be analysed also and added, where appropriate, to revenue, A proportion may, however, be treated appropriately in the
economic as well as in the budgetary sense as negative govern- ment expenditure and this proportion only is deducted from Ministries' gross expenditure,
c) Extra-BudgetaFY ~ds and Authorities,
In addition to revenue and expenditure included in the budget, the consolidated statment includes the transactions of these categories of extra-budgetary accounts.
Funds which wer-e ori.ginally financed from the budget , whose transactions are controlled by Ministries and the accounts of vrhdch appear in the Apxro pr-La tion Ao count s , although their expenditure year by year is not subject to annual vote ,
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Sinking Funds.
Statutory authorities which are sclely or rnadnLy der-endent
for finance on the Kenya Government and whose operations are of a non--commercial nature, An exception to this
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rule is the Hombasa Pipeline Board ..hioh operates as an independent public enterprise but which is retained in the government sector 'along with other water undertakings.
As a long term measure the importance of statutory
authori ties operating as independent tra.ding enterprises is possibly greateno\1gh in Kenya to wa'rrant the setting up, of sector accounts. At the moment, however, independent
statutory authorities operating commercially, with the one exception noted, are classified outside the government seotor.
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