- 41 -

in million of Kenya pounds, with the exception of balance of payments data which are in million of US dollars. The model produces a flow of funds consistency output table. The sectoral aggregates in these tables allow easy inspection of the consistency between the capital and current sources and uses of funds in the central government, the balance of payments, the monetary sector-disaggregated into the monetary authority and commerical banks-the national accounts, and the prvate sector. The key flow-of-funds identities and the projection rules for the important variables are summarized in Table 1.

# Inputting Historical Data

5. For convenience, the input worksheets closely resemble the format and presentation of data by the key data-generating government agencies. Information on banking comes from the Central Bank's Quarterly Economic Review and is expressed in millions of shillings as in the original source. Assets and liabilities are disaggregated and entered separately for the central bank, the monetary authority, commercial banks and the monetry survey. The model checks for intemal consistency across these historical accounts and adjusts other liabilities" when there are imbalances in individual accounts. A more difficult problem arises when the inconsistencies are found between the monetary survey and its components, the accounts of the monetary authority and the commercial banks. The rule of thumb used is to treat the monetary survey as accurate and adjust "other liabilities" of the monetary authority if the source of the discrepancy is not obvious.

6. The source of the balance of payments data, in millions of Kenya shillings, is the Balance of Payments (BOP) Unit within the Ministry of Finance. The format and sequence of data items are identical to the standard table generated by this government agency. For ease of comparison with other data sources, the worksheet routinely produces a table in millions of US dollars which is identical to the original input table in all other respects.

7. Data on stocks of medium and long-term and short-term external debt come from the DRS system of the World Bank and accords with that system's nomenclature and definitions. DRS is also the source of historical data on debt disbursements, IMF purchases, and interest and amortization payments. Information on grants comes from the BOP Unit of the Ministry of Finance.

8. The fiscal data input worksheet is a composite of standard tables produced by the IMF and is designated in millions of kenya pounds in fiscal years (July to June). Only data on central government finances are currently available. Sources of revenue are identified in a way which allows easy transcription of data from the standard data sources and allows revenue projections to respond to policy simulations. For similar reasons, recurrent expenditure is subdivided into wages and salaries, other goods and services, interest payments on foreign and domestic debt, etc. Fiscal data is converted from fiscal to calendar year, on the recommendation of the Budget Department of the Ministry of Finance, by using a factor of .351.65. For example, government expenditure in 1990 would comprise 35 percent of the expenditure in FY1989/90 and 65 percent of the expenditure in FY 1990/91.

9. The national accounts data cover gross national product by expenditure and are entered in millions of current Kenya pounds. The source of this information is the Central Bureau of Staistcs of the Government of Kenya. A memo item, showing the breakdown of GDP at factor cost by sector-agriculture, mining, manufacturing, other industry, services-is also compiled from this source and serves as the base year data for projecting GDP growth at factor cost. This breakdown replicates the categories from the national accounts section of the LOTUS-based RMSM, to which many analysts have become accustomed.