President William Ruto has announced that Kenya will shift to zero-based budgeting starting in the 2025/26 financial year, marking a departure from the current incremental budgeting system.....CLICK HERE TO READ THE FULL ARTICLE>>>
This change means that each new financial year’s budget will start from scratch, requiring all expenses and revenue lines to be justified afresh, rather than building on the previous year’s allocations.
“I believe that that time has come for us to break new grounds. That is why in the next financial year we will adopt a zero based budget,” Ruto said.
However, this is not the first time Kenya has attempted such a shift. A similar approach was introduced in the 2018/19 financial year, but it faltered as the budget process progressed. By the time the Supplementary Budget II was introduced in 2018/19, the zero-based framework had largely been abandoned.
A key challenge in implementing zero-based budgeting will be navigating Article 223 of the Constitution, which allows the government to spend money without prior parliamentary approval under specific circumstances.
There are concerns that while the initial budget might adhere to the zero-based approach, the introduction of supplementary budgets could derail the process, as happened in the past.
The success of this budgeting shift will depend on whether the government can maintain discipline and resist the temptation to revert to old practices as the financial year progresses.
Budget experts have initially hailed Kenya’splan to adopt Zero-Based Budgeting (ZBB), saying it will help trim expenditure excesses that overwhelm the country’s budget.
Currently, Kenya is using traditional budgeting, where previous spending levels are typically adjusted.
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...CONTINUE READING>>
