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

Public Financial Management for PRSP Implementation in Malawi
4. Coordination for PFM
Poor coordination between ministries, departments and agencies as well as
between different levels of government undermines the whole budget process.
5. Commitment
Lack of political commitment to sound PFM used to be a critical source of
uncertainty in the PFM process in Malawi. With the new leadership, there
were positive signs of credible commitment to accountability and effectiveness
of PFM, initially giving ground to the hope that substantial improvements
in Malawi’s PFM performance will soon materialise. However, it must
be recognised that much of the old systems of inappropriate power distribution
and unhelpful incentives remain.
Against the background of these multidimensional shortcomings that cause
Malawi’s PFM being characterised by uncertainty, ad-hoc planning and
budgeting, and informal practices the analysis conducted for this study suggests
that informal practices are often a compromise between what is legally
required and what actors can realise in the respective situation. These practices
are informal in the sense that they are not legally or institutionally provided
for. However, this does not automatically imply that all of these informal
practices are necessarily strictly illegal or actually bad. As matter of fact,
in many cases they represent rational second best solutions to PFM problems
by good willing actors facing the described constraints.
Although commitment seems absolutely essential as a precondition for reforming
and improving PFM performance, it seems that by itself it cannot
solve the more systemic problems that consist in a severe lack of resources
and capacity as well as poor coordination and bad donor behaviour. Given
these constraints, even with improved political commitment the following
conclusions are likely to remain valid:
— Enforcing accountability is extremely difficult in a PFM system such as
Malawi’s.
— The relevance of formal rules and procedures for PFM in Malawi is
limited and is being undermined in the process.
— The effectiveness of Malawi’s PFM system is limited and therefore the
implementation of strategic policies (e.g. the MPRS) through this system
is unlikely.
German Development Institute 7