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The Budget as Theatre- the Formal and Informal Institutional Makings of the Budget Process in Malawi

Author: L Rakner and L Mukubvu
Date: 2004
Size: 48 pages (400 KB)

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Summary

What can explain the apparent lack of political will to formulate, implement and monitor the budget process and public financial management in accordance with the overall goals of the Malawi Poverty Reduction Strategy (MPRS)? This paper by the Overseas Development Institute seeks to unpack the concept of political will through an examination of the budget process and an analysis of the formal and informal institutions involved. It finds that the budget process provides no realistic estimate of revenue or spending, and that all the actors have little bearing on the actual distribution of resources. In this sense, the budget is theatre.

Malawi’s has consistently failed to implement pro-poor policies, or to raise, allocate and account for public resources. The Government of Malawi does not adhere to a budget process consistent with its stated objectives, resulting in an unrealistic formulation of revenue or spending estimates. It does not comply with its contract to its citizens in this sense.

• At each stage of the budget process, informal and formal institutions interact. Decisions however continue to be influenced by informal practices, undermining sound formal institutions and securing the interests of politically powerful actors.
• At the implementation stage, existing rules and regulations are circumvented, allowing powerful actors to utilise the budget to serve their own interests.
• Expenditures that are earmarked for specific purposes are often switched to expenditures that further political interests.
• Accountability institutions are deliberately undermined through subversion, under-funding and political patronage. Toleration of this poor system is compounded by insufficient demands for accountability by both civil society and international donors.

The case of Malawi illustrates the need for international donors to develop a programme on economic accountability. This can be done through new forms of conditionality linked to whether governments deliver results and abide by the rule of law. Specific recommendations include:

• Strengthening parliament and the committee system. Donors could consider contributions to a basket fund, modelled after the donor support to the National Aids Commission, which could fund policy research, legislative drafting unit etc.
• Strengthening demand for accountability from civil society. This entails developing advocacy skills and mobilising certain private sectors in the industry, as well as churches, schools and the media.
• Using elections as a critical entry point for change. This time can be used by donors to provide information about the policy changes that are either underway, stalled, or need initiation.
• Employing qualitative indicators to evaluate the budget process. These include various legislative compliance and process indicators such as issuing of reports, transparency and inclusion of civil society organisations.

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Source: Rakner, L., Mukubvu, L., Ngwira, N., and Smiddy, K., 2004, 'The Budget as Theatre- The Formal and Informal Institutional Makings of the Budget Process in Malawi', Paper presented to Centre for Aid and Public Expenditure Seminar, Overseas Development Institute, London
Author: Overseas Development Institute (ODI), http://www.odi.org.uk/