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

Public Financial Management for PRSP Implementation in Malawi
Wherever this is the case, the effectiveness of multi-year planning and annual
budgeting as instruments to implement national strategic policies, such as
poverty reduction strategies, is severely compromised, and so are the prospects
for effective policy making for development and poverty reduction. The
effective implementation of PRSPs, thus, to a large extent, hinges on a good
match between formal PFM rules and procedures and actual PFM practices
and is closely linked to at least three key factors: (i) the political will of the
stakeholders in the budget process, (ii) an elaborated institutional framework
that supplies them with the right incentives and efficient control mechanisms,
and (iii) sufficient technical, human and financial capacity that enables them
to execute their tasks throughout the budget cycle efficiently and effectively.
Most research so far focuses either on PRSP implementation and PFM at the
central level or on decentralisation and local planning separately, with very
few studies attempting to link the two issues. In contrast, this study covers
PFM at local level and specifically examines how it is integrated into the
national PFM system with regard to implementing national strategic priorities
in a decentralised system. For this purpose the links (both where they exist
and where they are missing) and the incompatibilities between PFM at local
and central government level are examined.
Research approach
To study these complex relations, a case study seems the most adequate approach;
Malawi was chosen as a typical showcase for a poverty-stricken
developing country in Sub-Saharan Africa, pursuing both, the implementation
of a national PRSP and an ambitious decentralisation agenda in parallel. In
early 2005 Malawi also provided a somewhat special and particularly interesting
context for this study, due to its recent history: Gross irregularities and
massive overspending had led a number of donors to suspend development
assistance in 2001. In 2004, however, when new president was elected, he
was initially given considerable credit by the international donor community
for appearing to be strongly committed to policies aiming at fiscal stability
and austerity. Malawi in 2005, therefore, provides a particularly interesting
case for a study on the role of political commitment and other potential factors
for the formality and quality of PFM practices in a typical poor sub-
Saharan African country.
German Development Institute 3