Seminar on Independent Budget Analysis & Transparency

“How to Overcome the Missing Data Problem”

 June 9 – 12, 2014

Venue: University of Ottawa, Canada

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PARLIAMENTARY BUDGET OFFICEKENYA

Parliamentary Budget Office (PBO) Kenya

PBO Kenya carries out independent budget, finance and economic analysis to Committees of Parliament.

PBO is a non-partisan professional officePrimary function is to provide timely and

objective information and analysis concerning the national budget and economy.

The objective of the office is “to enhance the oversight role of Parliament by creating the necessary capacity for scrutiny of the national budget and the economy”

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PBO Kenya - BackgroundEstablished in 2007 . It got a legal backing with the enactment of

the Fiscal Management Act, 2009 (FMA) which established the PBO as an office in Parliamentary Service Commission.

The FMA was repealed in 2012 and an overarching law, the Public Finance Management Act, 2012 (PFM) was enacted.

The PFM law re-established the PBO enhancing its roles and stipulating the budget process in line with the Constitution of Kenya 2010.

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Structure of PBO Kenya

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CALENDAR OF EVENTS OF PBO KENYA

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Activity Sub- Activity TimelinePreparation of options for economic outlook, prospects and opportunities

Preparation of the Budget Options

January

Review of government’s policy options and budget assumptions

Analysis of the Budget Policy Statement

February

Review of the budget proposals

Analysis of the estimates of revenue and expenditure

May – June

Preparation of MP’s Budget Watch

June

Conduct Public Hearings on the budget estimates

Prepare report on public views concerning the budget

May

Conduct analysis of proposed taxation measures and tax policy changes

Analysis of the Finance Bill June

CALENDAR OF EVENTS OF THE PBO CONT.

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Activity Sub- Activity TimelineReview of government’s macroeconomic assumptions

Analysis of the Budget Review and Outlook Paper

October

Carrying out performance monitoring and analysis for oversight

Tracking of Revenue performance

Quarterly

Expenditure Tracking QuarterlyMacroeconomic forecasting

Continuous

Bill Analysis As need arisesResearch on urgent issues Thematic research

papersAs need arises

A Guide to the Budget ProcessThe MP’s Budget WatchBills/Motion Analysis and Cost Estimates ReportsPublic Expenditures trend data bankRegular Budget Reporting Analysis.The Budget OptionsThematic Research Papers Parliament Budget Office ModelContacts: Director, PBO Kenya

Website: www.parliament.go.keEmail: pbo@parliament.go.keTel: +254-20-2133074 Parliamentary Budget

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PBO KENYA PUBLICATIONS

MISSING DATA PROBLEM

Missing data problem occur when no data value is stored for the variable in an observation.

It is a common occurrence and can have a significant effect on the conclusions that can be drawn from the data.

Missing data can occur because of non response

No information is provided for several items or whole unit.

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SOURCES OF DATA

Economic Survey Reports

Statistical Abstract

Annual Sector Working Group Reports

Annual Expenditure and Revenue Estimate Books

Public Expenditure Review Analysis Report

Public Debt Reports

Quarterly Economic and Budget Review Reports (QEBR)

Monthly Exchequer Release Reports

Audit ReportsParliamentary Budget

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PBO MACROECONOMIC MODEL (PBOM)

• A data driven macroeconomic analysis and forecasting tools used by PBO Kenya in its regular work to enhance the quality of its reports.

• Model is comprehensive enough to describe the whole economy.

• Model is tailored to meet the needs of parliament in playing its budget oversight role.

• The model is critical in informing budgetary formulation process e.g. macroeconomic projections.

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THE BASIC PBOM STRUCTURE

• Model built along the aggregate demand-aggregate supply framework

• Real side of the economy contains 4 types of economic agents;a) Domestic production (private firms,

parastatals)b) Householdsc) Governmentd) Rest of the World (RoW)

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THE BASIC PBOM STRUCTURE…..ContModel contains 3 types of markets

a) Labor market

b) Product market

c) Financial market

Model is demand driven in the short run with multiplier effects through consumption and investment

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POVERTY MODULE IN THE PBOMThe PBOM contains a poverty module The poverty module which is used in

combination with PBOMSimulate the effects of macro-economic

developments and poverty reduction strategies on the number of poor households.

Welfare is measured in terms of total household expenditure

The poverty module also gives crude estimates of the income tax revenues and can therefore be used to analyze and monitor effects of policies and developments on income tax revenues

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MISSING DATA CHALLENGES

Lack of right of access to government data

Data exists but is scattered in the various Ministries, Departments and Agencies of Government

Data is fairly historical, updated data not readily available.

Available data is at a highly aggregated levels.

Most of the existing data is in paper based form and not digital form therefore hard to retrieve

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MISSING DATA CHALLENGES……..Cont

Limited information sharing and collaboration among MDAs, work tends to be fairly competitive in nature

Kenya Open Data Initiative launched in 2011 but has not taken off since the launch.

Access to information shrouded in bureaucracy.

Security/military data-highly classified (Top Secret)

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OVERCOMING MISSING DATA CHALLENGES

Building Informal Networks

Nurturing complementarities NOT competition with professional colleagues

Baseline surveys.

Proxy modelling

Personal judgement/Intuition

Build on existing competencies and experiences.

Undertaking joint publication & peer review forums

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Thank You – Q & A

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