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Business and Economics > Budgeting

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Cover IMF How To Notes
How to Improve Public Investment Management in Low-Income Countries
Khaled Eltokhy
,
Nicoletta Feruglio
,
Kezhou Miao
,
Arturo Navarro
, and
Eivind Tandberg
This How to Note discusses how low-income developing countries (LIDCs) can strengthen the effectiveness and efficiency of their public investment. The note draws on Public Investment Management Assessments and focuses on eight institutions that are likely to be key reform priorities in many LIDCs: project appraisal, multi-year budgeting, maintenance, project selection, procurement, availability of funding, project management, and monitoring of public assets. For each of these, the note discusses basic practices, which should be realistic initial reform objectives for low-capacity countries, as well as medium practices that may be relevant objectives for medium-term reforms. The note also discusses how to overcome reform implementation challenges and consolidate the reforms and provides examples of action plans to implement the different reforms.
Keywords:
Public investment management; public financial management (PFM); low-income developing countries; public investment management assessment (PIMA); public investment efficiency; reform agenda; management bottleneck; management priority; efficiency frontier; management reform; Public investment spending; Budget planning and preparation; Government cash forecasting
Cover IMF Staff Country Reports
Kenya: Seventh and Eighth Reviews Under the Extended Fund Facility and Extended Credit Facility Arrangements, Requests for Reduction of Access, Augmentation and Rephasing of Access Under the Arrangements, Modifications of Performance Criteria, Waiver of Nonobservance of Performance Criteria, and Review Under the Resilience and Sustainability Facility Arrangement-Press Release; Staff Report; and Statement by the Executive Director for Kenya
International Monetary Fund. African Dept.
This paper analyzes Kenya’s Seventh and Eighth Reviews under the Extended Fund Facility and Extended Credit Facility Arrangements, Requests for Reduction of Access, Augmentation and Rephasing of Access under the Arrangements, Modifications of Performance Criteria, Waiver of Nonobservance of Performance Criteria, and Review under the Resilience and Sustainability Facility Arrangement. Resolution of the exceptional external financing pressure earlier this year has revived market confidence, aided stabilization of the shilling, and enabled a faster buildup of foreign exchange reserves. However, large revenue shortfalls in FY2023/24 and pushback against revenue measures owing to governance concerns pose a challenge to the ongoing fiscal consolidation efforts. The Kenyan authorities face a difficult balancing act of boosting domestic revenues to protect critical spending in priority areas while meeting heavy debt service obligations. Delivering on this would call for improving governance and transparency to restore public trust in the effective use of public resources. Timely identification and deployment of fiscal contingency measures, as needed, maintaining prudent policies, recalibration of access, and a tailored capacity development strategy to help deliver on the reform agenda could somewhat help mitigate the elevated enterprise risks, including financial risks to the IMF. Success in climate finance mobilization efforts presents an upside to investments in climate resilience.
Keywords:
ECF arrangement; government initiative; implementation framework; Mombasa climate change action plan; ECF review; Debt sustainability analysis; Debt sustainability; Global; Africa
Cover IMF Staff Country Reports
Kenya: Fifth Reviews Under the Extended Fund Facility and Extended Credit Facility Arrangements and Request for a 20-Month Arrangement Under the Resilience and Sustainability Facility, Requests for Extension, Rephasing, and Augmentation of Access, Modification of a Performance Criterion, Waiver of Applicability for Performance Criteria and Waiver of Nonobservance for a Performance Criterion, and Monetary Policy Consultation Clause-Press Release; Staff Report; and Statement by the Executive Director for Kenya
International Monetary Fund. African Dept.
This paper presents Kenya’s Fifth Reviews under the Extended Fund Facility and Extended Credit Facility Arrangements and Request for a 20-month Arrangement under the Resilience and Sustainability Facility (RSF), Requests for Extension, Rephasing, and Augmentation of Access, Modification of a Performance Criterion, Waiver of Applicability for Performance Criteria and Waiver of Nonobservance for a Performance Criterion, and Monetary Policy Consultation Clause. Key policy priorities of the program include reducing debt vulnerabilities through multi-year fiscal consolidation efforts. This will be done through raising tax revenues and rationalizing spending, while protecting priority social and developmental spending. A proactive monetary policy stance is also part of a mutually reinforcing prudent set of policies. The reforms under the RSF program are expected to advance Kenya’s already strong record of accomplishment at addressing climate-related challenges. These reforms will advance efforts to incorporate climate risks into fiscal planning and the investment framework, reduce emissions through carbon pricing, enhance Kenya’s existing frameworks to mobilize climate finance; and strengthen disaster risk reduction and management.
Keywords:
Kenyan authorities; tax shortfall; apportionment ratio; authorities' effort; inflation expectation; trade tax; tax package; agriculture Project; Climate finance; Climate change; Debt sustainability analysis; Global; East Africa; Sub-Saharan Africa; Africa
Cover IMF Staff Country Reports
Kenya: Fourth Reviews Under the Extended Arrangement under the Extended Fund Facility and under the Arrangement under the Extended Credit Facility, and Requests for Augmentation of Access under the Arrangement under the Extended Credit Facility, and Modifications of Quantitative Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Kenya
International Monetary Fund. African Dept.
Kenya is navigating a turbulent global backdrop marked by volatile commodity prices, slowing growth in key trading partners, and constrained frontier market access to international capital markets. At home, a smooth transition following the August elections demonstrated Kenya’s increasing institutional strengths, while the multi-season drought has worsened food insecurity for vulnerable populations in arid and semi-arid regions and kept food prices elevated. Strong tax overperformance in FY2021/22 helped cushion some of these shocks, and the administration of President Ruto eliminated petrol subsidies in their first week in office. Inflation has breached the central bank (CBK) target band, and monetary policy has been tightened by 175 basis points this year. Foreign reserves are adequate, but lower than previously projected given shortfalls in FY2021/22 external public commercial and project financing, spending cuts in FY2022/23 also extending to externally-financed projects, and the prospects for continued challenging market conditions for frontier economies into 2023.
Keywords:
monetary policy stance; Kenyan authorities; policy objective; steadfast effort; target band; reinforcing Monetary; Debt sustainability analysis; Inflation; Global
Cover IMF Staff Country Reports
Kenya: Third Reviews Under the Extended Arrangement Under the Extended Fund Facility and Under the Arrangement Under the Extended Credit Facility, and Requests for Modification of Quantitative Performance Criteria, and Waiver of Applicability for Performance Criteria-Press Release; Staff Report; Staff Statement; and Statements by the Executive Director and by Staff Representative for Kenya
International Monetary Fund. African Dept.
This paper highlights Kenya’s Third Reviews under the Extended Arrangement under the Extended Fund Facility and under the Arrangement under the Extended Credit Facility, Requests for Modification of Quantitative Performance Criteria, and Waiver of Applicability for Performance Criteria. A strong recovery is underway, although global shocks due to spillovers from the war in Ukraine are creating new spending needs and adding to inflation pressures through rising global fuel, fertilizer, and food prices. Kenya’s program is delivering resilience by helping the country navigate these global shocks while still meeting the authorities’ targets and continuing to make progress in addressing debt vulnerabilities. Strong fiscal performance is providing a welcome resilience. Although the authorities are adjusting domestic fuel prices to international levels more gradually, program targets are still being met thanks to strong tax revenues. Maintaining the momentum in the authorities’ structural reform agenda is critical. Building on the ongoing efforts to improve the oversight of state-owned enterprises, it is essential to advance the restructuring of Kenya Airways and restore the long-term viability of Kenya Power and Lighting Company.
Keywords:
headline consumer price inflation; inflation target band; growth outturn; staff recommendation; Kenyan authorities; Fuel prices; Budget planning and preparation; Energy subsidies; Global
Cover IMF Working Papers
Macro-Fiscal Management Practices in Eastern and Southern Africa
Mr. Ian Lienert
This paper examines the institutional arrangements of the macro-fiscal function in 16 African countries. Most ministries of finance (MoFs) have established a macro-fiscal department or unit, but their functions, size, structure and outputs vary considerably. Based on a survey, we present data on staff size, functional scope and the forecasting performance of macro-fiscal departments and identify common challenges in the countries reviewed. Some MoFs perform many macro-fiscal functions, but actions of various kinds are needed to strengthen their macro-fiscal departments. This paper provides some guidance for policy-makers in the region for enhancing the quality and scope of macro-fiscal outputs.
Keywords:
macro-fiscal; macroeconomic; fiscal; function; medium-term; annual; forecasts; projections; policy analysis; fiscal strategy; ministry of finance; organizational; WP; MFD staff; MFD output; MFD characteristic; MFD director; MFDS monitor debt development
Cover IMF Staff Country Reports
Kenya: Fiscal Transparency Evaluation Update
International Monetary Fund. Fiscal Affairs Dept.
This Fiscal Transparency Evaluation (FTE) assesses the quality of fiscal reporting in Kenya against the principles set out in the Fiscal Transparency Code. Kenya has experienced a lot of structural and economic changes since 2014. One of the key objectives of this FTE is to estimate Kenya’s balance sheet, and to cover as many as possible of the entities in the public sector. The coverage of Kenya’s reporting of fiscal statistics has improved considerably. The report discusses that Kenya continues to perform well in the overall transparency of its fiscal forecasting and budgeting practices (Pillar II of the Code), which is based on a strong legal framework. It does so against a backdrop of significant ongoing reforms, including far-reaching fiscal devolution to counties, and the introduction of performance-based budgeting. A recent important change in the law is expected to synchronize the submission and approval of the government’s spending proposals and the tax measures in the Finance Bill. The recommendations set out under each of the pillars of this report aim to address several challenges. The report also encourages the authorities to continue with the implementation of the recommendations set out in the 2014 report, on which good or satisfactory progress has been made in about half the cases.
Keywords:
ISCR; CR; balance sheet; annual budget; tax expenditure; debt limit; fiscal policy; financial asset; gross revenue; adverse opinion; natural resource; insurance fund; quantitative analysis; feasibility study; GDP deflator; budget documentation; cross holdings; Budget planning and preparation; Financial statements; Fiscal risks; Fiscal reporting; Africa; fiscal year
Cover IMF Staff Country Reports
Cote d'Ivoire: Staff Report for the 2018 Article IV Consultation and Third Reviews Under the Arrangement Under the Extended Credit Facility and Extended Arrangement Under the Extended Fund Facility, and Request for Modification of a Performance Criterion
International Monetary Fund. African Dept.
This IMF Staff Report highlights that the robust economic growth in Côte d’Ivoire is projected to continue in 2018. The inflation remains subdued. The program aims to achieve a sustainable balance of payments position, foster inclusive growth and poverty reduction, and create fiscal space for investing in priority infrastructure and social projects. Strong economic performance since 2012, with average annual growth of 9 percent, reflected the economic recovery following political normalization, improved business environment, strong program of reforms, and supportive fiscal policy. A key policy challenge is to sustain robust growth and make it more inclusive and private sector-driven. Robust medium-term growth is expected to be supported by domestic demand.
Keywords:
ISCR; CR; debt; government; summary debt service table; real GDP; government policy; summary table; Ivorian authority; fuel price mechanism; Tax administration core functions; West Africa; Sub-Saharan Africa; Global; Africa
Cover IMF Working Papers
Medium-Term Budget Frameworks in Sub-Saharan African Countries
Mr. Richard I Allen
,
Taz Chaponda
,
Ms. Lesley Fisher
, and
Rohini Ray
More than 15 years ago, many countries in sub-Saharan Africa embarked on a program of budgetary reform, an important element of which was a medium-term budget framework (MTBF). This working paper focuses on the performance of these frameworks in six countries–– Kenya, Namibia, South Africa, Tanzania, Uganda, and Zambia. It assesses the effectiveness of MTBFs in achieving improved fiscal discipline, resource allocation, and certainty of funding, as well as wider economic and social criteria such as poverty reduction and more efficient public investment. In most countries, early successes were not sustained, and budgetary outcomes did not improve, partly for technical reasons, such as poor data and inadequate forecasting methodologies, but also because the reforms were largely supply driven. The paper argues that the development of MTBFs typically falls into four distinct phases. To make the transition from one phase to the next, developing countries should focus on building their capability in macrofiscal forecasting and analysis, and in improving the credibility of the annual budget process.
Keywords:
WP; country; case country; budget; medium-term expenditure frameworks; public financial management; sub-Saharan Africa; budget office; PFM system; budget framework; challenge function; budget review process; program budget; budget preparation process; Budget planning and preparation; Medium-term budget frameworks; Macroeconomic and fiscal forecasts; Africa
Cover IMF Staff Country Reports
Uganda: Fiscal Transparency Evaluation
International Monetary Fund. Fiscal Affairs Dept.
This paper evaluates the status of fiscal transparency in Uganda, where some key elements of fiscal transparency are in place. These have been augmented in recent years through a number of reforms. The Public Finance Management Act 2015 specifies the budget calendar, the main contents of budget documents, and the roles of the legislature and the executive in the budget process. There are some problems with the coverage, quality, and reliability of some information. Improving fiscal transparency will give the government a better understanding of the fiscal position and its exposure to fiscal risks, which will support effective fiscal and budget management in the face of these challenges.
Keywords:
ISCR; CR; budget year; balance sheet; local government; consolidated financial statement; gross revenue; performance report; framework paper; execution report; budget transparency website; budget reallocation; national budget; budget framework paper; budget execution report; budget structure; website of the Ministry of Finance; budget unit; budget framework; Budget planning and preparation; Fiscal risks; Financial statements; Fiscal reporting; Sub-Saharan Africa