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Stefan Leider et al. formal and informal PFM institutions in Malawi: “The budget process is a theatre that masks the real distribution and spending. All the actors, from civil society, government, and donors seem aware that many of their statements and actions have little bearing on [the] actual distribution of resources” (Rakner et al. 2004, iv ). Box 10 taken from Rakner et al. (2004, 15 et seq.) gives a vivid illustration of this phenomenon with regard to the MTEF process in Malawi. Similar discrepancies can be observed for the budget implementation and oversight processes in Malawi. Evidence shows that in many cases the formal PFM processes at local level are distorted. There are three main reasons for this. First, councillors regularly do not partake in important local PFM processes even if they are formally required to do so. Financial constraints often make it impossible for the DAs service committees and the full assembly to meet on a regular basis to decide and approve submissions of the DEC. Lack of finances, but also poor infrastructure, in particular transportation, telecommunication, and postal services make communication between councillors and the District Secretariat difficult. The second reason is the lack of skills and experience of elected councillors. Many elected members have not developed a routine with regard to formal procedures of decision-making and agenda setting for scheduled meetings. Therefore, decision-making procedures such as the approval of DDPs or the local budget often do not follow formal procedures and regulations. Not being familiar with routine formalities disables decision-making, leads to frustration and weakens commitment. This scenario does not only apply to DA members, but also to those members engaged in planning processes at lower levels (e.g. ADCs or VDCs). 78 German Development Institute
Box 10: The formal and informal institutions affecting budget formulation Formal institution Informal institution Outcomes MTEF Stage 1 A resource committee formed of the divisions of the MoF, NSO, RBM, and MEPD does macro economic modelling to forecast economic growth and estimate resources available. The process has problems: the modelling is done after budget process has moved to advanced stages. GDP growth rate is often overestimated. MRA tends to under-report its collections or capacity to collect. MTEF Stage 2 MoF conducts hearings where ministries and departments present their goals, objectives and activities and indicate priorities based on the MPRSP and costings. Donors influence the modeling. Executive would like to overestimate growth to give a good impression, enable planning for a bigger budget and create positive expectations among economic agents. Stakeholders act as if estimates are robust. An informal process that ignores the MTEF begins as line ministries inflate resource bids to MoF to receive a minimum requirement as it is known that MoF cuts budget even if appropriate budgets are submitted. Due to limited resources, the reallocation is done by some members of the cabinet, CCE a meets seldomly. Technocrats know that even if they present accurate technical proposals, the president and cabinet may change it. A budget that is set to overexpend, and necessitates borrowing. A budget that reflects political interests rather than a pro-poor focus. Some departments get too big allocations given their contribution to poverty reduction.
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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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