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

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