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

Public Financial Management for PRSP Implementation in Malawi
1 Introduction
Recent years have seen a number of fundamental and far-reaching reorientations
in the debate on international development policy and cooperation;
Poverty Reduction Strategies (PRS) – initially formulated as a pre-requisite
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 involving civil society and development partners, these
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 (World Bank 2005). By June
2006, fifty countries had prepared a full PRSP (World Bank 2006a).
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 to manage donor contributions.
1 Consequently, PRSPs have also become central to the provision of
development assistance in terms of both grants and loans (ODI 2004, 3) 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. Donors are increasingly funding these budgets. Accordingly,
the debate on PRSP implementation and direct budget support increasingly
focuses on the quality of public financial management (PFM), or – to stick to
the jargon – Good Financial Governance criteria (cf. IMF / EO 2004, 4; GTZ
2006).
There is another important topical issue in the current debate on international
development policy, besides the discussion on PRSPs, PBAs and PFM. It is
the continued drive for decentralisation in developing countries. The effectiveness
and efficiency of public service delivery for poverty reduction, or so
it is hoped, can be improved by moving decision-making closer to the grassroots
and thereby also strengthening the political participation and representa-
1 The Paris Declaration on Aid Effectiveness from March 2005 represents the latest milestone
in this process.
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