Public Financial Management for PRSP - Deutsches Institut für ...
Public Financial Management for PRSP - Deutsches Institut für ...
Public Financial Management for PRSP - Deutsches Institut für ...
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
<strong>Public</strong> <strong>Financial</strong> <strong>Management</strong> <strong>for</strong> <strong>PRSP</strong> Implementation in Malawi<br />
Part II: Empirical Findings<br />
5 Worlds Apart: The Theory and Practice of <strong>Public</strong><br />
<strong>Financial</strong> <strong>Management</strong> in Malawi<br />
The <strong>for</strong>mal legal and institutional framework <strong>for</strong> public financial management<br />
in Malawi has undergone a series of re<strong>for</strong>ms since the first free multiparty<br />
elections in 1994 and even prior to that. New legislation regulating<br />
finance, audit and procurement was written, providing <strong>for</strong> relatively clear-cut<br />
responsibilities and time schedules of the budget process in Malawi. Accordingly,<br />
various recent studies on Malawi’s PFM system conclude that the legal<br />
and institutional framework <strong>for</strong> PFM in Malawi is relatively well designed. In<br />
principle, it provides a good starting point <strong>for</strong> a sound management of public<br />
finances (c.f. Rakner et al. 2004, 14–15, 18). For example, the World Bank’s<br />
2003 Country <strong>Financial</strong> Accountability Assessment <strong>for</strong> Malawi states: “When<br />
compared to most developing countries, Malawi has a good legal and institutional<br />
framework <strong>for</strong> public sector financial management and accountability.”<br />
(World Bank 2003, v). There<strong>for</strong>e, one could expect that the <strong>for</strong>mal legal<br />
and institutional PFM framework in Malawi should provide in principle <strong>for</strong><br />
effective fiscal and expenditure planning, budget preparation, execution, and<br />
control in line with the priorities set in the Malawi Poverty Reduction Strategy<br />
Paper (M<strong>PRSP</strong>).<br />
At the same time, however, many assessments judge the budget process in<br />
Malawi to be extremely weak (c.f. IMF 2004a; IMF 2004b; see Table 4 and<br />
Figure 6 below). The main reason <strong>for</strong> this is that <strong>for</strong>mal institutions and procedures<br />
bear little relevance <strong>for</strong> PFM practice in Malawi. As a recent study<br />
on Malawi’s <strong>for</strong>mal and in<strong>for</strong>mal PFM institutions commissioned by DFID<br />
states:<br />
“The budget process is a theatre that masks the real distribution and<br />
spending. All the actors, from civil society, government, and donors seem<br />
aware that many of their statements and actions have little bearing on<br />
[the] actual distribution of resources” (Rakner et al. 2004, iv).<br />
The cited studies of Malawi’s PFM tend to focus on central government.<br />
However, the findings of the field study conducted <strong>for</strong> this research in 2005<br />
confirm that their assessment is also valid <strong>for</strong> local government in Malawi. It<br />
found ample evidence that Malawi’s local PFM-system is characterised even<br />
German Development <strong>Institut</strong>e 55