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

Public Financial Management for PRSP Implementation in Malawi
As a consequence, hard budget ceilings are neither clear nor consistently
rolled out and enforced (CABRI 2004, 40), and as Table 4 shows, budget
outcomes differ substantially from planned allocations, both for recurrent and
development expenditures. Although there have been notable improvements
in overall variance on expenditure, in particular with regard to overspending
on individual budget votes, important compositional shifts and thus significant
re- prioritisation in the course of budget execution occur. exist (see Figure
6). This phenomenon is particularly marked for the fiscal year 2001/02,
when overall variance on expenditure was only slightly above 10 percent, but
compositional shifts were extremely important with more than three quarters
of budget votes receiving either 10 percent more or 10 percent less than originally
budgeted for.
Figure 6: Variability of budget outturn with respect to original budget
60
50
40
30
20
10
0
99/00 00/01 01/02 02/03 03/04
% Variance on
Expenditure
% Votes receiving less
than 90% of budget
% Votes receiving
more than 110% of
budget
Source: IMF (2004a; 2004b)
According to the IMF, the observed poor outcome of the budget process is
rooted in the fact that formal institutions and procedures bear little relevance
for PFM practice in Malawi as the directives of the budget are not being observed
by the senior leadership, and public expenditure management regulations
that bind the administration are not fully enforced (IMF 2004a, 7). Or,
to repeat the image invoked by as a recent study commissioned by DFID on
German Development Institute 77