Determinants of Fiscal Performance in Kenya
Abstract
The objective of this study was to analyze the determinants of fiscal performance in the
Kenya. The study analyzed data for 1963 to 2012 which represented the sample size for the
study using Unrestricted Vector Auto regression Analysis. A model on the determinants for
fiscal performance in Kenya was also estimated.
The research established that real GDP per capita growth rate, the treasury bill rate, the total
debt service as a proportion of total exports, inflation rate, tax revenue as a percentage of
GDP, broad money to GDP, current account balance and gross government investment are
jointly significant determinants of fiscal performance in Kenya.
We recommend that the Government should have measures aimed at reducing inflation rates
that increases the cost of prices and affects the value of public consumption and subsequently
public demand. We also recommend the promotion of local investment by maintaining a
stable interest rate leading to increased private investment and increased tax revenues and
subsequently improved revenues for the Government .Finally, we recommend re-evaluation
of the financial industry or sector by introducing conditions to control lending and
consequently utilize available monetary policies to keep money supply in control.