Public Financial Management for PRSP - Deutsches Institut für ...
Public Financial Management for PRSP - Deutsches Institut für ...
Public Financial Management for PRSP - Deutsches Institut für ...
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<strong>Public</strong> <strong>Financial</strong> <strong>Management</strong> <strong>for</strong> <strong>PRSP</strong> Implementation in Malawi<br />
ernment authorities. In 1998 the National Decentralisation Policy (NDP) was<br />
approved, which includes establishing political decentralisation through<br />
democratically elected local assemblies and the devolution of central government<br />
functions to local government level.<br />
The theory and practice of public financial management in Malawi<br />
Since the mid-nineties, the <strong>for</strong>mal legal and institutional framework <strong>for</strong> public<br />
financial management in Malawi has undergone a series of re<strong>for</strong>ms. New<br />
legislation regulating finance, audit and procurement was written, providing<br />
<strong>for</strong> relatively clear cut responsibilities and time schedules of the budget process<br />
in Malawi. Accordingly, recent studies on Malawi’s PFM system conclude<br />
that the legal and institutional framework <strong>for</strong> PFM in Malawi is relatively<br />
well designed and in principle provides a good starting point <strong>for</strong> a<br />
sound management of public finances <strong>for</strong> example. One could, there<strong>for</strong>e,<br />
expect that in principle the <strong>for</strong>mal legal and institutional PFM framework in<br />
Malawi should provide <strong>for</strong> effective fiscal and expenditure planning, budget<br />
preparation, execution, and control in line with the priorities set in the Malawi<br />
Poverty Reduction Strategy Paper (M<strong>PRSP</strong>).<br />
At the same time, however, the budget process in Malawi is judged by most<br />
assessments as extremely weak. This is due to the fact that <strong>for</strong>mal institutions<br />
and procedures bear little relevance <strong>for</strong> PFM practice in Malawi. In fact,<br />
instead of being guided by the relatively sound <strong>for</strong>mal legal and institutional<br />
framework, the actual PFM process is characterised by three main features:<br />
Ad hoc mode of planning and budgeting: Malawi’s PFM is not characterised<br />
by routine standard bureaucratic procedures but rather by an ad hoc mode of<br />
action throughout the PFM process.<br />
In<strong>for</strong>mal practices: Apart from deliberate manipulation of processes <strong>for</strong> personal<br />
gain, in<strong>for</strong>mal practices are often used as pragmatic solutions to cope<br />
with unexpected problems.<br />
Uncertainty: Malawi’s PFM system is characterised by systematic uncertainty,<br />
in particular with regard to (i) the availability of financial resources,<br />
(ii) the validity of <strong>for</strong>mal rules, (iii) roles and responsibilities, (iv) future<br />
political developments, and (v) the progress of re<strong>for</strong>ms.<br />
These features are pervasive throughout Malawi’s PFM system and the budget<br />
process in particular. Most actors involved in the process contribute to this out-<br />
German Development <strong>Institut</strong>e 5