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Stefan Leiderer et al. tives and was thus contrary to the declared objective of MASAF to strengthen accountability and transparency of local institutions. The Social Support Programme (SSP) aims at providing technical assistance to NGOs and CBOs to work directly with vulnerable groups at the grass roots level. To apply for projects, the communities need to identify a civil society organisation in order to receive support. This has provided an incentive to establish many new organisations to access funding from the SSP. However, letterbox organisations abused the funds and local authorities could not provide accurate information about correctly operating CBOs. The result has been confusion and frustration among local communities. Finally, MASAF follows a somewhat different approach from other funding mechanisms that leave local authorities entirely responsible for the resources. One reason is that the MASAF was established before the approval of the NDP; therefore, before local governments were actually established in Malawi. However, another reason might be that the MASAF has been conceived as a country-wide development effort within the same logic as the PRSP and the MDG debate, i.e. as a processes at a national scale and not as a tool for local intervention. However, with the establishment of a new Local Development Fund most of the observed coordination failures should cease to exist since the fund is aimed at consolidating existing financing mechanisms into a common system. 45 6.5 Commitment Lack of political commitment to sound PFM used to be a critical source of uncertainty in the PFM process in Malawi. At the time of this research, there was a commonly shared feeling among donors and observers in Malawi that the new leadership, showed positive signs of a much stronger commitment to accountability and effective PFM, giving hope that substantial improvements in Malawi’s PFM performance would soon materialise. For example, the IMF reported about the staff monitored programme (SMP): “The overall performance under the SMP reflects a high degree of commitment by the government 45 For a detailed presentation of the proposed mechanism, see GFA (2005). 122 German Development Institute
Public Financial Management for PRSP Implementation in Malawi to adhere to its budget. This is a noteworthy turnaround from experience in previous years” (IMF 2005). Shortly after the new government was elected, a number of measures were taken as symbolic steps to indicate commitment to budgetary discipline and sound debt management. One such step was moving government offices from Blantyre to Lilongwe. In addition, to limit travelling expenditures, approval procedures for travels made by ministers and PSs were transferred from line ministries to the Office of the President. In an attempt to improve cash planning in line ministries, the treasury gave back the responsibility of utility costs to line ministries, from which it had originally been taken away to avoid accumulation of arrears. This measure includes sanctioning mechanism, withholding cash transfers in case of new arrears. The new government also introduced a sanctioning mechanism in order to achieve better budget control at local level. The new Financial Reporting Guidelines for Local Authorities state that funds for local authorities may be withheld in case financial reports are not submitted to the NLGFC on time. Finally, funding was increased for the National Audit Office (NAO) and Anti Corruption Bureau (ACB). The initial anti-corruption drive saw a number of senior officials, including some former ministers, arrested. Yet, the most prominent case was the one of Minister of Education Yusuf Mwawa, who in May 2005 was dismissed and later convicted for using government funds for a private wedding celebration. However, most elements of the old system of inappropriate power distribution and perverse incentives remain in place. In addition, during the field research most observers agreed that the current political commitment depended heavily on very few people at the top, above all the new President and the Minister of Finance. This created a certain degree of uncertainty about the sustainability of the apparent commitment to sound PFM of the new administration. Even a genuinely well-intentioned President, within such a system, may lack support and may be threatened by a coalition of those who previously profited from the old system (IDD and Associates 2005, 28). The role weak political commitment might still play in creating a parallel PFM system of informal rules and procedures in Malawi should thus not be underestimated. Nonetheless, the evidence collected and observations made during the field study suggest that at this time, the absence of political will to German Development Institute 123
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Public Financial Management for PRS
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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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