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

Stefan Leiderer et al.
come to varying degrees and are at the same time negatively affected by it.
Determinants of informal PFM practices in Malawi
The observed gap between the formal framework for PFM and actual PFM
practice in Malawi is rooted in a wide range of causes. While the fact that
PFM processes in Malawi are predominantly shaped by informal institutions
and procedures is widely recognised, most studies of the issue do not go into
the details of the various underlying causes. Mostly, the reason for informal
PFM practices is seen almost exclusively in a lack of political commitment
by government and the bureaucracy. In contrast to this, the findings of the
field research for this study, suggest that although an important one, lack of
political commitment is only one reason among many for Malawi’s PFM
system being characterised by informal practices; and, what is more important,
it seems not necessarily the most pressing problem with regard to effective
MPRSP implementation.
From the analysis of the collected qualitative data, five key areas can be identified
leading to Malawi’s PFM system being characterised by persistent an
ad hoc mode of action, informal procedures and systemic uncertainty:
1. Capacity for PFM
Although Malawi’s government institutions suffer from understaffing, the
key problems with regard to capacity for PFM are:
– Lack of adequately qualified staff in key positions for PFM;
– Insufficient equipment and financial resources;
– Shortcomings in organisational and human resource management.
2. Resources for administrative PFM processes
The substantial lack of funds in the civil service even for the most basic administrative
processes threatens the functioning of the PFM system and leads
to poor budgetary outcomes.
3. Donor impact on PFM
Poorly coordinated and unaligned donor activities tend to weaken annual
and medium term budget planning and contribute to undermining budget
credibility.
6 German Development Institute