Influence of Public Financial Management Reforms on Budget Implementation by Kenyan City Counties

Abstract

The pursuit of Public Financial Management Reforms (PFMR) is centered on, among other functions, enhancing transparency in governance, increasing prudential allocation of financial capital, accountability in financial management, separating policy and management functions. The PFMRs seek to address gaps identified in the devolved systems of government and public organizations to remedy inadequate strategy orientation and lapsed strategy as well as to build on institutional transformation. In Kenya, the PFMRs seek to ensure fiscal efficiency and discipline in the use of public finances by enhancing public service efficiency and safeguarding available resources to be used in the best interest of the people. This study sought to examine the influence public financial management reforms on budget implementation by Kenyan city counties. The PFMRs studies included IFMIS Re-Engineering and fiscal decentralization. The study was based on modern portfolio theory, resource-based theory and stakeholder theory and relied on an expost-facto descriptive research design with a survey method to determine the relationships between the study variables. Structured questionnaires, data collection sheets and interview schedules were used to collect data which was then cleaned, coded and scrutinized thoroughly for completeness. The study relied on primary data collected from the treasuries, directorates of economic planning, budget offices, IFMIS departments and sectoral departments of Nairobi city county, Mombasa city county and Kisumu city county respectively. Secondary data was obtained from the annual county governmets’ budget implementation reports. The data was analyzed using SPSS version 24. Statistical measures such as means, percentages and standard deviation were used to interpret the data. The researcher also performed both a linear regression analysis and a Spearman correlation analysis to show the relationships between the study variables. The study revealed strong positive and statistically significant correlation between fiscal decentralization and budget implementation while IFMIS re-engineering had a negative and statistically insignificant correlation with budget execution. The results of the study were considered pivotal to the national government, the legislature, national treasury, county governments and respective sectoral departments, the Commission for Revenue Allocation, the office of the controller of budget, the public, budget implementation oversight agencies and county chiefs as it highlights important correlates of effective budget execution.