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Coordination at the centre

Coordination at the centre. The case of Malawi. Background. (a) Political Perception That everything of the one party system was bad During the one party system the administration of Government became rigid. (b) Technical Poor performance of the economy Poor institutional set-up

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Coordination at the centre

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  1. Coordination at the centre The case of Malawi

  2. Background • (a) Political Perception • That everything of the one party system was bad • During the one party system the administration of Government became rigid. • (b) Technical • Poor performance of the economy • Poor institutional set-up • Poor system for budget preparation and execution

  3. Institutional set-up for economic management • (i) Department of Economic Planning and Management (EPD) • Under the Office of the President and Cabinet, with the following sections: • Development Division (Investment Planning, M/E, Aid Coordination) • Macroeconomic section • Sectoral Planning section • (ii) Ministryof Finance • Budget division (Budget Planning, Operations, M/E)

  4. Institutional set-up cont…. • Economic Affairs Division • Debt and Aid Management Division

  5. Economic Performance • Stable from the 60s to late 80s, thereafter; • Unstable exchange rate (liberalization of the currency) • Increased budget deficit (partly due to lack of respect for the budget) • Increased domestic borrowing • Poor project performance

  6. Perceived Solutions • Reforms: • (a) Institutional (Civil Service Restructuring) • Merger of EPD and Ministry of Finance (Ministry of Finance and Economic Planning) and establishment of National Economic Council (NEC) • Retrench excess, non-priority staff in the civil service • (b) Technical • Introduction of the MTEF as a guide for budget preparation and implementation • Merger of the recurrent and development budget preparation and management

  7. Technical cont… • Planning and budgeting done in Ministry of Finance • Review the Finance and Audit Act (to take into account the changed environment)

  8. Effects of the merger • Little or no central government appraisal of projects • Treasury emphasized on budgeting and very little on investment appraisal • Donors dealt directly with ministries without reference to ministry of finance • Increase in off-budget projects • Poor planning for recurrent expenditure due to lack of knowledge of projects which are phasing out

  9. Effect cont… • Proliferation of poorly designed and non-priority projects

  10. Public Expenditure Review 2001 • Revealed that about 40% of projects managed by government are not included in the budget • Recommended strengthening the appraisal process, coordination within ministry of finance and between ministry of finance and NEC

  11. Further reforms • NEC reverting to EPD • Reconstituted the investment planning section • Aid coordination remained in Ministry of Finance • Enactment of the Public Finance Management Act (with sanctions for non-compliance)

  12. Effect of further reforms on budget and planning • Poor flow of information between EPD and Ministry of Finance to inform budget preparation • Maintenance of three project data base (EPD, Finance and Donors) • Ministries continue dealing directly with donors, this is also true with some donors • Improved quality of projects

  13. THANK YOU

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