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

Stefan Leiderer et al.
These findings do not refer to a developing country but to PFM in the German
capital, Berlin, in the late 1990s. An informal ‘second budget cycle’ had
been established and was almost completely separated from the official
budget cycle in response to the severe financial constraints the municipal
administration was facing.
In organisational sociology literature, it is a well-established phenomenon
that administrative systems in modern democracies tend to increase their
autonomy and discretionary space for informal practices when the political
and administrative system suffers from work overload (Luhmann 1987, 142–
151). Therefore, the question is legitimate in how far PFM in Malawi really
differs from other, well-consolidated and in general sufficiently well functioning
PFM systems in developed countries. This study would argue that
what makes the case of Malawi special is not the mere existence of uncertainty,
an ad hoc mode of planning and budgeting and informal practices in
general but rather the quality of these problems as well their occurrence in a
typical sub-Saharan African institutional context. Therefore, the major differences
to PFM in developed countries apart from the lack of qualified staff are
the following:
— The extent of uncertainty: In addition to relying on a narrow and highly
vulnerable tax base, Malawi heavily depends on donors to finance its
state and most other public expenditure. As donor behaviour is identified
as one major source of uncertainty in PFM, this dependency implies
that the extent of uncertainty with regard to financial resources in the
budget process is also extraordinarily high.
— Institutional context: Formal institutions as well as laws and regulations
are not yet consolidated and habitualised as relevant and dominant
guidelines for administrative action. They often do not serve the purpose
of “absorbing” uncertainty (see Section 7.1.1). To institutionalise procedures
and establishing routines is a long-term process that is still ongoing.
The effects of uncertainty, ad hoc mode of planning and budgeting as well as
informal practices in such a context are completely different from those of
consolidated democracies with strong administrative systems. While these
features also affect the public perception of administrative procedures negatively
in the context of developed countries, they do not jeopardise the system
and the procedures as such. This is completely different in a context where
institutions and formal rules and procedures are not yet consolidated and
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German Development Institute