Seminar on Independent Budget Analysis & Transparency “How to Overcome the Missing Data Problem” June 9 – 12, 2014 Venue: University of Ottawa, Canada Parliamentary Budget Office Kenya 1 PARLIAMENTARY BUDGET OFFICE KENYA

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 office  Primary 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” Parliamentary Budget Office Kenya 2

PBO Kenya - Background  Established in  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  The FMA was repealed in 2012 and an overarching law, the Public Finance Management Act, 2012 (PFM) was enacted.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 Parliamentary Budget Office Kenya 3

Structure of PBO Kenya Parliamentary Budget Office Kenya 4

CALENDAR OF EVENTS OF PBO KENYA Parliamentary Budget Office Kenya 5 ActivitySub- ActivityTimeline Preparation 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 proposalsAnalysis 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 BillJune

CALENDAR OF EVENTS OF THE PBO CONT. Parliamentary Budget Office Kenya 6 ActivitySub- ActivityTimeline Review 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 TrackingQuarterly Macroeconomic forecasting Continuous Bill AnalysisAs need arises Research on urgent issuesThematic research papersAs need arises

 A Guide to the Budget Process  The MP’s Budget Watch  Bills/Motion Analysis and Cost Estimates Reports  Public Expenditures trend data bank  Regular Budget Reporting Analysis.  The Budget Options  Thematic Research Papers  Parliament Budget Office Model Contacts: Director, PBO Kenya Website: Tel: Parliamentary Budget Office Kenya 7 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. Parliamentary Budget Office Kenya 2

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 Reports Parliamentary Budget Office Kenya 9

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. Parliamentary Budget Office Kenya 10

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)Households c)Government d)Rest of the World (RoW) Parliamentary Budget Office Kenya 11

THE BASIC PBOM STRUCTURE…..Cont  Model 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 Parliamentary Budget Office Kenya 12

POVERTY MODULE IN THE PBOM  The PBOM contains a poverty module  The poverty module which is used in combination with PBOM  Simulate 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 es  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 Parliamentary Budget Office Kenya 13

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 Parliamentary Budget Office Kenya 14

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) Parliamentary Budget Office Kenya 15

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 Parliamentary Budget Office Kenya 16

Parliamentary Budget Office Kenya 17 Thank You – Q & A.