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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Stefan Leiderer et al.<br />
more by in<strong>for</strong>mal procedures and ad-hoc behaviour by virtually all relevant<br />
stakeholders in the PFM process.<br />
This observed gap between the <strong>for</strong>mal framework <strong>for</strong> PFM and actual PFM<br />
practice in Malawi has a wide range of causes. In order to provide a clearer<br />
picture of these discrepancies and their relevance <strong>for</strong> <strong>PRSP</strong> implementation in<br />
Malawi, the following sections contrast the ‘theory’ and ‘practice’ of PFM 9 in<br />
more detail be<strong>for</strong>e Chapter 6 goes on to examine the underlying determinants<br />
of in<strong>for</strong>mal PFM practices in Malawi.<br />
5.1 The <strong>for</strong>mal legal and institutional framework <strong>for</strong> PFM<br />
in Malawi<br />
This section first introduces the <strong>for</strong>mal and institutional framework <strong>for</strong> PFM<br />
in Malawi including the <strong>for</strong>mal links between the M<strong>PRSP</strong> and the budget,<br />
be<strong>for</strong>e examining the determinants <strong>for</strong> these divergences more closely in<br />
Chapter 6. The empirical findings with regard to actual PFM practice in Malawi<br />
are presented in Section .<br />
5.1.1 The legal framework <strong>for</strong> PFM in Malawi<br />
The most important laws regulating <strong>Public</strong> <strong>Financial</strong> <strong>Management</strong> in Malawi<br />
are the<br />
— Constitution of the Republic of Malawi 2002<br />
— <strong>Public</strong> Finance <strong>Management</strong> Act No. 7 of 2003<br />
— <strong>Public</strong> Audit Act No. 6 of 2003<br />
— <strong>Public</strong> Procurement Act No. 8 of 2003<br />
These acts have replaced the <strong>Public</strong> Finance and Audit Act, which was considered<br />
inadequate <strong>for</strong> modern financial management. The new acts are<br />
mainly based on the recommendations given by a team of experts led by the<br />
9 In this context ‘theory’ of PFM refers to the <strong>for</strong>mal legal institutional framework <strong>for</strong> the<br />
management of public finances while ‘practice’ covers the actual reality of PFM in Malawi.<br />
While it is obvious that a certain gap between the <strong>for</strong>mal framework and practical reality<br />
always exists, the degree to which a <strong>for</strong>mal legal and institutional framework actually<br />
guides real processes may differ widely in different contexts.<br />
56 German Development <strong>Institut</strong>e