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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 142 German Development Institute
Public Financial Management for PRSP Implementation in Malawi habitualised. In such a context, there is the danger that these features of PFM are attributed to the system as such and therefore the formal institutions, rules and procedures on which the whole process should be based are delegitimised and undermined in the process. These reflections go far beyond the purely administrative system: administrative action in modern democracies is democratically legitimised exclusively through its rule-boundedness. In the words of Luhmann: modern administrations generate “legitimation through procedures” (1969). If this process of genuine institutionalisation and habitualisation of formal rules and procedures is threatened, it is not only a risk for the administrative system, but threatens the base of democracy in a country. This can happen, for example, through the prevalence of uncertainty, ad hoc behaviour and informal practices in PFM. It is important to keep this wider context in mind when assessing the features identified in PFM in Malawi. Schedler (2001) argues that institutional uncertainty is a constitutive element of the transition process towards democracy. Therefore, uncertainty of the observed form in Malawi’s PFM can also be interpreted as a central feature of the much wider phenomenon of democratic transition in sub-Saharan Africa. 7.4 Conclusions: Consequences of uncertainty in Malawi’s PFM What are the consequences that result from these findings regarding PFM in Malawi? Among the most important consequences of uncertainty, ad hoc behaviour and informal practices at the different government levels of PFM are the following: — The effectiveness of the PFM system is limited; therefore, the implementation of strategic policies (e.g. PRS) through this system is unlikely. — Enforcing accountability is extremely difficult in a PFM system such as Malawi’s. — The relevance of formal rules and procedures for PFM in Malawi is limited and is being undermined in the process. Particularly in a context of political transition, decentralisation tends to further complicate the PFM system and procedures, thereby increasing the likeliness that the problems identified in this study are exacerbated to a considerable extent. German Development Institute 143
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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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