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Stefan Leiderer et al. ing due to observed weaknesses in the expenditure control system. Initially, the cash budget system was devised as a temporary measure, but it remains in place as a central tool for budget control and stabilisation. In order to improve planning security for spending agencies, at least partially, a credit ceiling allocation system was introduced. This system provides spending agencies with a tentative three-month allocation forecast. Each ministry and public agency holds various bank accounts (for personnel, administration, loans, donors, projects, programmes etc.) at commercial banks. The ceilings or spending limits for each ministry, public agency and category of expenditure are determined by the Accountant General and are then communicated to the Reserve Bank of Malawi and commercial banks holding government accounts. Controlling Officers can draw cheques and payments based on the spending limits from their respective bank accounts and the Reserve Bank of Malawi only reimburses cheques within the respective ceilings to the commercial banks. (European Commission 2002, 53; World Bank 2003, 7). At the beginning of each month all line ministries are required to submit an Expenditure Return Report to the MoF. This report provides information about all the expenditures incurred during the month. These reports are based on information from cost centres of line ministries and districts. The timely submission of the Expenditure Return Report is a prerequisite for the release of funds in the following month (European Commission 2002, 13, 55). Until recently, reporting was done manually. However, in 1996 the government started implementing an Integrated Financial Management Information System (IFMIS) to computerise all records. This system should help to provide timely and accurate financial information, to improve and strengthen financial control, to introduce a standardised integrated financial management reporting system for the GoM at various operational levels and to provide the Accountant General with an upgraded computerised accounting system (World Bank 2003, v). Monitoring, budget control and evaluation The government has developed a master plan for monitoring and evaluating the progress of implementing the MPRSP at a strategic level. This plan consists of five components: — Poverty Reduction Strategy Monitoring — Poverty, Vulnerability, and Inequality Monitoring 62 German Development Institute
Public Financial Management for PRSP Implementation in Malawi — Impact Assessment and Policy Analysis — Poverty Monitoring Information System — Communication and Advocacy Initiative; The lead institution for monitoring and evaluation at a strategic level is the M&E Division within the MEPD. The formal framework and institutional setup for the evaluation and control of the budget process in Malawi in principle provides for effective control and scrutiny of government’s PFM performance. Key actors are the National Audit Office (NAO), the National Assembly, Controlling Officers (COs), the Anti-Corruption Bureau, and finally Civil Society Organisations (CSOs). National Audit Office – According to the Public Audit Act, the National Audit Office (NAO) is a fully independent audit institution headed by the Auditor General who serves for a term of five or ten years maximum. The Auditor General audits and examines transactions, books, accounts and other financial records associated with programmes and projects financed with public resources. Wherever it seems appropriate, the Auditor General can express an opinion concerning the reliability of information and the management and control of public money (Public Audit Act: section 4–13). The Auditor General summarises the results of the audits and reviews of the financial year in an annual report that is submitted by the 31 December to the President or the Speaker of the National Assembly for information purposes. Subsequently, the members of the National Assembly discuss the report and have the opportunity to comment on it (Public Audit Act: section 14–17). National Assembly – Parliament incorporates an important oversight function in the budget process. As described above, the MoF has to present the budget estimates for the forthcoming year to the National Assembly for political scrutiny. The MoF is only authorised to disburse funds if the budget allocations have passed through Parliament and are approved by the Appropriation Act (PFM Act: Section 21–26). The Public Accounts Committee of the Parliament scrutinises the financial statement of the government as well as the reports and statements of the Auditor General presented to the National Assembly. It has the task to examine whether there is any evidence of noncompliance of actual expenditure patterns with the original budget allocations as approved by the National Assembly. In any such case, the committee can request line ministries and public agencies to explain or justify the use of public funds. Although the Committee can recommend sanctions, it is not German Development Institute 63
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Public Financial Management for PRS
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Studies Deutsches Institut für Ent
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Preface The present study on ‘Pub
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4 The Case of Malawi 44 4.1 Why Mal
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Bibliography 151 Annexes 157 Tables
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Boxes and Tables in the Annexes Box
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DS EHP ESAF EU GBS GDP GoM GRF GTZ
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TOR UDF UNCDF UNDP UNV USAID VAP VD
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Stefan Leiderer et al. PRSP impleme
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Publications of the German Developm
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Discussion Paper 16/2007 Schirm, St
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