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Budgetary Theatre
Actors, Formal/Informal Institutions,
and Outcomes in Malawi Public
Finance
Malawi Social Context
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HIV/AIDS adult prevalence rate
15% and 19.5% among pregnant
women
65.3% Poor, 28.8% extreme
poverty
High Inequality – poorest 20%
consumes 6.3%, richest 20%
consumes 46.3%
85% Exports Agriculture, 30% GDP,
75% small holder
Tobacco, tea, sugar, maize
Public Finance
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Inflation 13.5%, Growth 2%, Deficit
7.6% GDP
IMF funding stopped in 2000,
resumed in October 2003
Debt service ratio 19%,
debt/exports 267%, debt/domestic
revenue 472%
Formal Political Regime
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Banda Regime end 1993
Muluzi (UDF) 1994-1999, 19992004
Weak Muluzi successor likely to win,
Mutharika
Presidential, Single-Member
Districts, Unicameral
Informal Political Context
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Regional representation: UDF
(South), MCP (Centre), AFORD
(North)
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Personalist, patronage politics
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Weak civil society (Churches)
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Narrow commercial elite, agroexport elite tied closely to political
elite
Budgeting and Pro-Poor Planning
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Budget is a theatrical production that
leads actors far from stated intentions.
Room for some executive autonomy,
earmarking and small patronage that
occasionally helps the poor.
More often, and more dangerous, largescale corruption with devastating macrosocial effects.
Budgeting Actors
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Public actors: Executive,
Legislature, Independent agencies,
political parties.
Civil society: Media; Private
sector; Churches; NGOs.
Donors: Bilateral (CABS; nonCABS); Multilateral; International
NGOs.
Stages of Budgeting
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Long-Term Planning
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Annual Formulation
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Legislative Authorization
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Executive Implementation
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Internal and External Oversight
Institutions
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Formal:
Laws, International Agreements,
Resource Constraints
Informal:
Patronage, Kin, Ethnicity, Religion,
and Region.
FORMAL
INSTITUTIONS
Laws
Figure 1: The Political Economy of the
Budget in Malawi
Budget Constraints
Intl Agreements
Stages
Planning
ACTORS
Public
Civil society
Donors
INFORMAL
INSTITUTIONS
Patronage
Networks
Region,
Kin, ethnic
Religious
Pro-Poor/
Consistent
Anti-Poor/
Consistent
Pro-Poor/
Inconsistent
Anti-Poor/
Inconsistent
Formulation
Passage
Implementation
Oversight
Stage 1: Planning
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President, MOF, MOP, Donors
Formal: MPRSP, EGS, IMF Agreements, Donor
Conditions
Informal: Electoral Incentives, Corruption
Opportunities, Donor Boards, Donor Home
Countries
Wildly optimistic growth, inflation, aid, interest
estimates – inconsistent
Civil society + parliament silenced, but
overestimates and MPRSP lock-in some propoorness
Formulating a Budget
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Pres, MOF, Ministers, Bureaucrats,
Donors
Formal: Plans, Resource Envelope,
Donor Agreements, PPEs
Informal: President secure, Mins
compete, CCE dominated, Bureaucrats
overruled, Mins and Donors go offbudget
Room for accommodation, major
corruption, donor uncertainty
PPEs and minor patronage
Passage in Legislature
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MOF, Civil Society, Committee,
Parliament, donors
Formal: Consultation, Committee
amendments, Vote
Informal: Consultation PR, Allowances for
exec. privileges, MP careers, Party
Discipline
Executive proposal little substantive
change, though for the better
Perhaps some geographic distribution
Implementation
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MOF, Reserve Bank, Controlling Officers,
Mins, Civil Society, Donors
Formal: Monthly MOF Resource Allocation
Committee, Controlling Officers, Cabinet
Committee on Economy, PPEs,
Interest/Personnel
Informal: Cash Budget, Pres and MOF
dominate CCE, Mins dominate Controlling
Off., MPs pressure
Politically powerful overspend, Mins
switch lines, poor records, debt
Constituencies may distribute, PPEs help
some, but resource ceiling limits pro-poor
Oversight
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President’s office, Parliament, Semi-independent
Agencies, Donors
Formal: Statutes (2003), Controlling Off.
Accountability to SPC and Treasury, Internal
Audit, Public Accounts Committee, Anti-Corruption
Bureau, Donor Agreements
Informal: SPC no incentive, Mins move COs,
Committees unfunded, External auditors poorly
funded, Reporting Inconsistent
Little analysis of consistency. Mostly oversight on
bribes. Donors press institutional change but
unreliable, inconsistent.
Civil society excluded, elections distribute
patronage.
Implications
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Strengthen positive formal institutions:
Build aid into democratic budget process.
Strengthen parliament, committees,
budget authorization and appropriation,
Internal and external accountability.
Accept and formalize positive informal
institutions. Regionalize budget,
constituency funds for MPs, civil society
sectoral approach. First year of mandate
as moment for change.
Minimize negative formal and informal
institutions – build delays and shortfalls
into estimates of aid flows. More reporting
on cash budget.