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Stefan Leiderer et al. — Uncertainty: Malawi’s PFM system is characterised by systematic uncertainty, in particular with regard to the availability of financial resources, and with regard to the validity of formal rules. Uncertainty in terms of financial resources stems from the fact that various actors in Malawi’s PFM system at no time know how much money they will have at their disposal for implementing policies during the next financial year (amount). Even after their budgets have been approved, cutbacks occur frequently. Even worse, most actors do not even know when they will be told how much money they will actually receive as the official schedule is not adhered to (ceilings and time of disbursement). Uncertainty in terms of formal rules not only means that formal rules and procedures might not be well known by many stakeholders in the first place but that their practical relevance is further undermined by the constant nonadherence to them. These features seem to be pervasive throughout Malawi’s PFM system and the budget process in particular. Most actors involved in the process contribute to this outcome to varying degrees and are at the same time are negatively affected by these practices. In order to understand the determinants of PFM outcomes in Malawi, therefore, the underlying causes for these features of Malawi’s PFM system need to be explored in detail. After analysing the collected qualitative data, five key areas can be identified leading to Malawi’s PFM system being characterised by persistent ad hoc mode of action, informal procedures and systemic uncertainty. The following sections discuss these main areas in more detail. They can be summarised as follows: 1. Capacity for PFM Although government institutions suffer from understaffing, the key problems with regard to capacity for PFM in Malawi are: - Lack of adequately qualified staff in key positions for PFM - Insufficient equipment and financial resources - Shortcomings in organisational and human resource management. 86 German Development Institute
Public Financial Management for PRSP Implementation in Malawi 2. Resources for administrative PFM processes The substantial lack of funds in the civil service, even for the most basic administrative processes, threatens the functioning of the PFM system and leads to poor budgetary outcomes. 3. Donor impact on PFM Poorly coordinated and unaligned donor activities tend to weaken annual and medium-term budget planning and contribute to undermining budget credibility. 4. Coordination for PFM Poor coordination between ministries, departments and agencies as well as between different levels of government undermines the whole budget process. a) Horizontal coordination at central government level (MoF- MEPD) Although responsibilities between MoF and MEPD are clearly assigned to one of the two ministries in most cases, coordination problems arise, as MoF sometimes seems to push through its own priorities. b) Vertical coordination in general Coordination between central and local government level is characterised by a highly hierarchical system, which results in poor vertical information flows, in particular from the bottom to the top. With regard to information flows, unclear distribution of responsibilities and the introduction of new PFM tools as well as local authorities’ dependency on transfers from central government, this leads to delays and uncertainty in the budget process. Finally, this results in informal practices at local government level. c) Vertical-sectoral coordination (MoE, MoH) As devolution in the sectors has not gone very far yet, communication and coordination between central and deconcentrated units of sector ministries do not appear to pose major problems yet. However, the envisaged devolution of sector responsibilities to local German Development Institute 87
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Studies Deutsches Institut für Ent
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Preface The present study on ‘Pub
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4 The Case of Malawi 44 4.1 Why Mal
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Bibliography 151 Annexes 157 Tables
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Boxes and Tables in the Annexes Box
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DS EHP ESAF EU GBS GDP GoM GRF GTZ
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TOR UDF UNCDF UNDP UNV USAID VAP VD
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Discussion Paper 16/2007 Schirm, St
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