Public Financial Management for PRSP - Deutsches Institut für ...

Stefan Leiderer et al.
tainty absorption”. 46 As the collected evidence suggests, this is routinely not
the case with regard to rules and procedures for PFM in Malawi.
Uncertainty with regard to financial resources
This is a common problem for almost all actors involved in PFM in Malawi
at the various levels. It is also prominent at all stages of the budget cycle. In
the strategic planning phase, for example, MEPD and MoF frequently do not
know how much funding they will receive from donors in the medium term.
This often is also the case in the annual budget formulation phase. Sector
ministries at central level are sometimes required to formulate budgets without
having received their respective ceilings before. This leads to cutbacks
when the amount of money that the sector ministries finally receive is below
the budget proposal. If sector ministries should receive more funds than expected,
additional activities have to be included in an ad hoc mode. Therefore,
sector ministries as well as other government bodies plan, formulate and
execute budgets under a high degree of uncertainty. Even in the budget execution
stage, it is often not clear, e.g. for local government levels, when and
how much money will be disbursed by donors and central government. The
two most important components of uncertainty with regard to financial resources
are the amount of money and the time of disbursement.
Uncertainty with regard to roles and responsibilities
Another common feature seen is that actors are not well informed about
which institutions or actors are formally responsible for specific tasks and
how labour should actually be divided. This is understandable in a context
where many large reforms are being implemented at the same time, e.g. decentralisation
and PFM reform. Uncertainty with regard to responsibilities
and roles often result from either insufficient or unsystematic dissemination
of information on new regulations or from the fact that the new division of
responsibilities is not considered practical by actors or is not in their interest.
46 Uncertainty absorption as defined by Luhmann (2002, 41–44, 238–240) and based on
March / Simon (1958) takes place, for example, if the following happens: an organisation
processes information, considers risks, alterations and alternative solutions, assumes the responsibility
for all mistakes made in this process and in the end draws conclusions and
comes up with a decision. Uncertainty absorption has been successful if only the final decision
but not the various elements of the process of arriving at this decision serve as starting
point for further decisions and processes (adapted and translated from Luhmann 2002, 238).
128 German Development Institute