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Analysis of the Fiscal Management Bill, 2008
The Fiscal Management Act was enacted by Parliament as a private bill. The Act is awaiting Presidential assent pending revisions proposed by the President. This paper discusses the contents of the Bill, why the President has declined to assent to the Bill, the proposed changes to the Bill and the effect of implementing these changes. Download Full Analysis here
The Bill establishes the parliamentary Budget Office as an office in the parliamentary service. The central functions of the office include providing the National Assembly with timely and objective information and analysis on the national budget. The Bill also proposes principles of prudent fiscal management which the government and
all public institutions must comply with as a matter of policy.
In declining to sign it into law, the President made a number of proposals on the Bill including that it should not provide for Parliament to assign unspecified powers relating to the national budget and the economy to the
relevant departmental committees, functions he considers are within the realm of the Executive. However, it is the view of this study that this clause is being used to contest the Bill on misleading advice. The inclusion or
exclusion of the clause is inconsequential for the Bill. Parliament should therefore assent to it.
The President also appears to have concerns on what he sees as Parliament’s intrusion into the arena of budget implementation, e.g. through the management of devolved funds such as the CDF, which he seems to think needs to be
curbed. Withholding his consent to the Bill may be his way of forcing a renegotiation with Parliament of its role in budget implementation. It may be inadvisable to link these two issues as doing so risks picking a futile political battle. Strictly speaking, it is inaccurate to say that Parliament should be excluded from the management of public resources: all the stages of the budget process, and not just the implementation stage, constitute an attempt to
manage public resources, from which Parliament cannot be divorced.
The Fiscal Management Bill, and the powers that it proposes for Parliament including that the Budget Office be established, is critical to bridging the information gap between the Executive and Parliament in the management of
Some provisions of the Bill, such as budget impoundment, are not typical of the Commonwealth parliamentary system which Kenya’s Parliament applies, but they are desirable in principle. Budget impoundment is an innovation which empowers Parliament to withhold the approval of line items of the vote of errant departments. Effective enforcement
will take time and general strengthening of public financial management.
In order to achieve the greater goal of strengthening its oversight powers over the management of public finances, Parliament would be well advised to assent to the President’s proposals where they do not alter the import of the law.