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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<strong>Public</strong> <strong>Financial</strong> <strong>Management</strong> <strong>for</strong> <strong>PRSP</strong> Implementation in Malawi<br />
No direct <strong>for</strong>mal mechanism links the M<strong>PRSP</strong> directly to the recurrent<br />
budget. Recurrent expenditures are classified as being part of a programme, a<br />
sub-programme and as a line item, which are not related to M<strong>PRSP</strong> activities.<br />
However, as part of the Enhanced HIPC conditionality Protected Pro-poor<br />
Expenditures (PPEs) were incorporated in the Malawian budget <strong>for</strong> 13 key<br />
areas. PPEs are aimed at protecting vital pro-poor expenditures from<br />
arbitrary in-year cuts to budget expenditure caused by fiscal restraints (Fozzard<br />
/ Chauncy 2002, 37–38). And in effect, although not directly linked to<br />
M<strong>PRSP</strong> activities but rather to inputs such as drugs, nursing materials, teaching<br />
materials etc., PPEs appear to have led to a significant redirection of<br />
resource allocation towards MPRS activities (Durevall / Erlandsson 2005, 27<br />
et seq.). Thus, in principle there are a number of mechanisms linking the<br />
budget to the M<strong>PRSP</strong>, which should ensure that to a certain degree the<br />
M<strong>PRSP</strong> is implemented through medium-term planning and the annual<br />
budget. Accordingly, the World Bank concludes in its 2004 HIPC review that<br />
the 2002/03 budget allocated some 63.5 percent of ORT to M<strong>PRSP</strong> activities<br />
(see Table 2). 14<br />
Budget <strong>for</strong>mulation<br />
The whole budget <strong>for</strong>mulation process is designed to take six months, starting<br />
with line ministries submitting their budget bids in December and ending<br />
with the approval of the budget estimates by Parliament in June. The Secretary<br />
to the Treasury (Principal Secretary of the MoF) <strong>for</strong>mally begins the<br />
process in December by submitting the Treasury Circular 1 to the line ministries.<br />
The circular requests the line ministries to submit budget estimates <strong>for</strong><br />
the next budget year.<br />
14 ORT (Other Recurrent Transactions) represent all expenditures other than statutory and<br />
statehood expenditures, development budget, and personal emoluments and there<strong>for</strong>e in the<br />
short run represent the discretionary recurrent expenditure of government. However, one<br />
has to keep in mind that these numbers are <strong>for</strong> planned ORT only. As explained in the following<br />
section, actual budget outturns differ substantially from planned figures. In addition,<br />
a recent overview of Malawi’s <strong>Public</strong> Finance <strong>Management</strong> Re<strong>for</strong>ms published by SIDA<br />
emphasises that these allocations may not be due to policy decisions as the MPRS does not<br />
contain any details about spending priorities in line ministries and there is no clear connection<br />
between policy decisions and budget implementation (Durevall / Erlandsson 2005, 27<br />
et seq.).<br />
German Development <strong>Institut</strong>e 59