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Public Financial Management for PRSP Implementation in Malawi Summary Recent years have seen a number of fundamental and far-reaching reorientations in the debate on international development policy and cooperation; for one, Poverty Reduction Strategies (PRS) – initially formulated as a prerequisite for debt relief under the HIPC initiative – have become widely accepted as comprehensive strategic frameworks for many developing countries’ efforts to reach the Millennium Development Goals by 2015. Prepared through a participatory process, PRS Papers (PRSPs) are meant to describe a country's macroeconomic, structural and social policies and programmes to promote growth and reduce poverty as well as associated external financing needs. International donors in turn have committed themselves to align their support to developing countries’ own strategic policies and to rely increasingly on the recipient countries’ own administrative systems and procedures to manage donor contributions. Consequently, PRSPs have also become central to the provision of development assistance in terms of both grants and loans as they represent the key reference document for support from bi- and multilateral donor agencies through Programme-based Approaches (PBAs), including general and sector budget support. At the implementation stage, PRSPs have to be translated into medium-term policies and programmes, which in turn have to be implemented through annual budgets. Accordingly, the debate on PRSP implementation and direct budget support increasingly focuses on the quality of public financial management (PFM). Another important topical issue in the international development policy debate is the continued drive for decentralisation in developing countries. By moving decision-making closer to the grassroots and thereby strengthening the political participation and representation of the poor, the effectiveness and efficiency of public service delivery for poverty reduction, or so it is hoped, can be improved. At the same time, however, decentralization renders the processes of budget planning, execution and control significantly more complex, multiplying coordination requirements and possibly overtaxing scarce human and technical capacities in developing countries. German Development Institute 1
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Publications of the German Developm
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Discussion Paper 16/2007 Schirm, St
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