Why Kenya’s Budget is Read Before MPs Pass the Finance Bill

In Kenya, the budget is read before Members of Parliament (MPs) pass the Finance Bill due to a combination of procedural, legal, and practical reasons. Here are the main factors:

1. Legal Framework

• Constitutional Requirements: The Kenyan Constitution and the Public Finance Management Act outline the budget-making process. The budget must be presented to Parliament by a specific date, usually in June, to allow sufficient time for debate and approval before the start of the fiscal year on July 1.
• Budget Policy Statement (BPS): Before the budget is read, the Treasury must submit the BPS to Parliament. This statement provides a framework for the budget and must be approved by MPs, ensuring alignment with the government’s fiscal policy and priorities.

2. Practical Considerations

• Time for Debate and Amendments: Presenting the budget early provides MPs with ample time to scrutinize, debate, and propose amendments to the budget. This extensive review process is crucial for transparency and accountability.
• Coordination with Other Bills: The Finance Bill, which includes the necessary tax and revenue-raising measures to fund the budget, is typically more complex and requires detailed discussion. By reading the budget first, MPs have a clearer understanding of the government’s financial needs, facilitating a more informed debate on the Finance Bill.

3. Policy and Planning

• Setting Priorities: The budget speech outlines the government’s priorities and expenditure plans. This presentation helps align parliamentary discussions and decisions on subsequent bills, including the Finance Bill, with these priorities.
• Public Awareness and Input: The budget reading informs the public about government plans and initiatives. This transparency allows citizens and stakeholders to engage with MPs, providing feedback that can influence the legislative process, including the passage of the Finance Bill.

4. Economic Stability and Predictability

• Market Confidence: Presenting the budget in advance helps maintain economic stability by providing clarity to investors, businesses, and international partners about the government’s fiscal policy. It reduces uncertainty, which is beneficial for economic planning and investment.
• Fiscal Discipline: The early presentation of the budget reinforces fiscal discipline by ensuring that revenue and expenditure plans are scrutinized and approved before implementation. This process helps prevent unapproved spending and enhances financial accountability.

The practice of reading the Kenyan budget before MPs pass the Finance Bill is designed to ensure a thorough, transparent, and accountable budgeting process. It allows for detailed scrutiny, debate, and public participation, ensuring that the government’s financial plans are aligned with its fiscal policy and priorities while maintaining economic stability and market confidence.