Budget Preparation and Approval
Budgeting
Budget Preparation and Approval
Syllabus tag: KASNEB CPA | Advanced Level | CA35S2 Advanced Public Financial Management
1. The budget cycle
The budget cycle has four main phases: preparation (strategic planning, resource estimation, expenditure proposals); approval (Parliamentary review and appropriation); execution (spending, collection, and accounting); audit and evaluation (reviewing performance and accountability).
Kenya operates a Medium-Term Expenditure Framework (MTEF) — a rolling three-year budget planning framework that links policy priorities to resource allocation. The MTEF covers the budget year plus two outer years, providing a medium-term outlook.
2. Budget preparation timeline (national government)
August Cabinet approval of Budget Review and Outlook Paper (BROP) —
reviews previous budget and updates medium-term projections
September Budget circular issued to ministries/departments — sets ceilings
October–January Ministerial budget submissions
February Budget Policy Statement (BPS) submitted to Parliament —
sets overall budget framework and fiscal policy stance
March Parliament approves BPS
April Division of Revenue Bill (sharing between national and counties)
County Allocation of Revenue Bill (sharing among counties)
April/May Budget statement read by Cabinet Secretary for Finance
June Appropriations Bill passed by Parliament
End June Financial year begins 1 July
3. Programme Based Budgeting (PBB)
Kenya has adopted PBB, which organises the budget around programmes and sub-programmes rather than input categories (line items). Each programme has defined: strategic objectives, outputs (deliverables), outcomes (results), and performance indicators. This links budget allocations to measurable results, improving accountability and enabling performance evaluation.
4. County budget preparation
County governments follow a parallel but distinct process: County Integrated Development Plan (CIDP) — 5-year development blueprint; Annual Development Plan (ADP) — links CIDP to the annual budget; County Budget Policy Statement — submitted to the County Assembly by 28 February; Budget Estimates — submitted to County Assembly by 30 April; County Appropriations Act — passed before the end of June.
Public participation is a constitutional requirement (Article 201 and the PFM Act) — public must be given an opportunity to submit views on the budget proposals before they are finalised.
5. Types of expenditure
Recurrent expenditure: ongoing operational costs — wages, salaries, supplies, services, debt interest. Development/capital expenditure: investment in assets — infrastructure, equipment, construction. Kenya's Constitution requires that borrowing be used primarily for capital development, not recurrent spending.
6. Supplementary budgets
Where actual expenditure is likely to exceed approved estimates, or where new priorities arise during the year, a Supplementary Appropriations Act must be approved by Parliament before additional spending proceeds. Each county may pass up to two supplementary budgets in a financial year.