Kenya’s Optimistic Revenue Forecasts Are Causing Problems, but Better Tools Can Help

Author
Cade McCurdy, Harvey Galper, Reehana Raza
Content Type
Commentary and Analysis
Institution
Urban Institute
Abstract
For national governments around the world, effective budgeting depends on accurate revenue forecasts. Revenue forecasts are estimates of what governments will collect from various sources, such as income taxes, value-added taxes, corporate taxes, and excises, which together determine the funds available to allocate to various public programs. If revenues are significantly overestimated in the budgetary process, the results can be unexpected borrowing, high debt-service costs, and cutbacks in these important governmental services. Under Kenya’s newly decentralized government structure, accurate revenue forecasting has become more important than ever. Kenya’s new constitution, approved in 2010, decentralized the country’s government structure and created 47 county governments, each responsible for a broad range of programs and services. Counties’ execution of these programs depends heavily on funds from the national government.
Topic
Government, Budget, Economic Growth, Revenue Management
Political Geography
Kenya, Africa