Public Financial Management for PRSP - Deutsches Institut für ...
Public Financial Management for PRSP - Deutsches Institut für ...
Public Financial Management for PRSP - Deutsches Institut für ...
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Stefan Leiderer et al.<br />
In addition, as a key element the distribution is supposed to “encourage Local<br />
Assemblies to raise more own revenues” (Decentralisation Secretariat<br />
2005, 1). However, this per<strong>for</strong>mance-based element of the <strong>for</strong>mula is not yet<br />
being applied.<br />
According to the National Decentralisation Programme I and II, five percent<br />
of the total (net) national government revenue (NNR) 29 should be allocated to<br />
districts through the GRF. However, as can be seen in Table 6, actual allocations<br />
have been much lower in the past and – possibly even worse – are<br />
highly unpredictable <strong>for</strong> District Assemblies. This leaves local governments<br />
severely under-funded with regard to recurrent expenditure <strong>for</strong> administrative<br />
activities and service delivery. Local governments thus often cannot allocate<br />
the required 25 % of GRF transfers to development activities because they<br />
need these funds to cover administrative and other recurrent costs (GFA<br />
2005, 50). The cases of Dedza and Rumphi help to illustrate the relative importance<br />
of GRF allocations <strong>for</strong> rural districts. GRF allocations account <strong>for</strong><br />
roughly 29 percent (Dedza) and 16 percent (Rumphi) of the assemblies’ respective<br />
total income. Given this heavy dependency on GRF transfers and the<br />
fact that they are used mainly to pay salaries, there is an argument that the<br />
distribution of GRF funds between districts according to poverty indicators<br />
may be inappropriate (GFA 2005, 53).<br />
29 Excluding grants.<br />
102 German Development <strong>Institut</strong>e