ARRANGEMENT OF SECTIONS
1. Short title
RESPONSIBILITY FOR FINANCIAL MANAGEMENT
3. General responsibilities of the Minister
4. Specific responsibilities of the Minister
5. Minister may delegate powers
6. General responsibilities of Ministers
7. Secretary to the Treasury
8. Specific responsibilities of the Secretary to the Treasury
9. Secretary to the Treasury may delegate powers
10. Responsibilities of Controlling Officers
11. Access to information
ECONOMIC, FISCAL AND FINANCIAL POLICY
12. Principles of responsible fiscal management
13. Generally accepted accounting practice
14. Economic and fiscal policy statement
15. Budget policy statement
16. Fiscal strategy
17. Economic and fiscal update
18. Economic and fiscal data
19. Reporting requirements
20. Provision of relevant information
PARLIAMENTARY APPROPRIATION AND BUDGET
22. Form of the Estimates
23. Appropriation required
24. Adjustment for unforeseen expenditure
25. Transfer between outputs
26. Approval of Appropriation Bill
27. Charge for supply of goods or services
PUBLIC MONEY AND THE CONSOLIDATED FUND
28. Consolidated Fund
29. Development Fund
30. Treasury Funds
31. Dealing with public money
32. Banking business of the Government
33. Banks to furnish statements
34. Overseas imprests and other accounts
35. Balances may be invested
36. Temporary transfers from one fund to the other
38. Remission or refund of revenue
39. Refunds and corrections
TRUST MONEYS AND UNCLAIMED MONEY
40. Trust money
41. Establishment of a Trust Fund and trust accounts
42. Operation of trust accounts
43. Investment of trust account money
44. Unclaimed money—interpretation
45. Period after which money becomes unclaimed
46. Register to be kept
47. Holder to notify Secretary to the Treasury and owner of entry
48. Payment of unclaimed money to the Consolidated Fund
49. Unclaimed trust money
51. Examination of accounts
52. Secretary to the Treasury may make payment to claimant
53. Responsibility to second claimant
BORROWING, LOANS AND GUARANTEES
54. Government not to borrow except under an Act
55. Instrument of loan agreement
56. Minister may borrow when authorized
57. Provisions for general borrowing
58. Subsidiary loan agreement
59. Borrowing on overdraft
60. Treasury Bills
61. Borrowing by stocks, bonds or promissory notes
62. Liability of the State
63. Power to give guarantees and indemnities
64. Taking and releasing of securities by the State
65. Expenditure for protection of public securities
66. Power to lend money
67. Application of this Part
68. Performance, management plan and budget
69. Financial activities
70. Bank accounts
71. Moneys payable to statutory bodies
72. Private loans
73. Borrowing on overdraft by statutory body
76. Application of resources
77. Contracts for works, supplies and services
78. Accounts and records
79. Reports and financial statements
80. Powers of inspection of the Secretary to the Treasury
81. Payment of surplus funds to Consolidated Fund
82. Investments in corporations other than statutory bodies
83. Financial statements
84. Quarterly summaries and monthly reporting
85. Details to be included in quarterly and monthly statements
86. Annual reports
OFFENCES AND DISCIPLINE
87. Disciplining of Controlling Officers and chief executives in certain circumstances
89. Obligation to report
90. Write-off of losses
92. Treasury Instructions
93. Transitional provisions
94. This Act to prevail
95. Repeals and savings
First Schedule — Contents to be included in reports and statements under Part III
Second Schedule — Register of unclaimed money
Third Schedule — Provisions for general borrowing and Treasury Bills
Fourth Schedule — Form and content of financial statements
7 of 2003
14 of 2006
An Act to foster and enhance effective and responsible economic and financial management by Government, including adherence to policy objectives; to provide accompanying accountability arrangements together with compliance with those arrangements; to require the Government to produce statements of proposed budget policy, confirmation of adherence to fiscal discipline, economic and fiscal statements, including economic and fiscal forecasts and updates, and performance information, including comprehensive financial statements; and for matters connected therewith and incidental thereto
[8TH JULY 2003]
This Act may be cited as the Public Finance Management Act.
In this Act, unless the context otherwise requires—
“Appropriation Act” means an Act of Parliament the principal purpose of which is the application of public moneys for such goods and services as are specified in the Act;
(a) a financial institution whose operations include the acceptance of deposits subject to withdrawal or transfer by cheque or other means of third party transfer; and
(b) any financial institution in Malawi or outside Malawi in which any public money is deposited or kept in accordance with the provisions of this Act, and includes an international financial institution;
“Cabinet” means the Cabinet of Ministers appointed in accordance with section 92 of the Constitution;
“chief executive” means the head, however called, of a statutory body;
“Consolidated Fund” means the Consolidated Fund established by section 172 of the Constitution;
“Controlling Officer” means any person appointed by the President who is—
(a) the head or principal person in-charge of a Ministry or Department; and
(b) charged with a duty to, or who actually does collect, receive, disburse or deal in any way with any public money, or a person who is charged with the purchase, receipt, custody, or disposal of, or the accounting for, any public resources or public securities;
“Estimates” means the statements of the proposed public revenues and expenditure in any financial year as approved by the National Assembly through the passing of an Appropriation Act;
“expenditure” means the actual payment of moneys by Government, whether requited or unrequited and whether for current or capital transactions;
“financial statements” means the financial statements required under Part IX and the Third Schedule;
“financial year” means—
(a) in relation to the Government and Government financial statements, a period of twelve months ending on 30th June; and
(b) in relation to a statutory body, the annual accounting period of the statutory body;
“generally accepted accounting practice” means—
(a) standards and practices promulgated by the International Federation of Accountants as applicable to Governments and statutory bodies; or
(b) if no standard or practice exists, then accounting principles or practices which have the authoritative support of the accounting profession in Malawi or in countries that maintain accounts and records and prepare financial statements similar to the Government of Malawi and its statutory bodies;
“Government” means the executive Government of Malawi established under Chapter VIII of the Constitution;
“Government agency” or “agency” means an office, entity or instrument of the Government, other than a Ministry, or statutory body;
(a) non-repayable receipts from other Governments, international institutions or domestic institutions or individuals; or
(b) non-repayable payments made by the Government to other Governments, international institutions or domestic institutions or individuals;
“imprestee” means a person in whose hands any public money is placed for expenditure;
“internal control” includes the controls adopted to ensure that within Government—
(a) revenue is properly assessed and collected;
(b) expenditure is validly and correctly authorized;
(c) revenue, expenditure, assets and liabilities are properly recorded and accounted for;
(d) financial and operating information is accurate and reliable;
(e) assets are safeguarded against loss or destruction;
(f) public resources are employed and managed in an effective, economic and efficient manner;
(g) there is no waste or extravagance with respect to public resources;
(h) outcomes or provisions produced are consistent with those specified in an Appropriation Act;
(i) relevant Government policies and legislation are being complied with; and
(j) there is effective and efficient management of the financial resources of Government;
“National Assembly” or “Assembly” means the National Assembly established under Chapter VI of the Constitution;
“National Audit Office” means that part of the office of the Auditor General charged with the responsibility of audit;
“officer” includes an officer, a contract officer and an employee of the Public Service of Malawi;
“outcomes” mean the impacts or consequences for the people of Malawi of the outputs or activities of Government or the results of the outputs produced;
“outputs” means the goods and services that are produced by a Ministry or other person or body who receives an appropriation;
“personal emoluments” includes salaries, wages, fees, contract payments for the provision of personal services, and taxable allowances, but does not include any payment in the nature of reimbursement for expenses incurred;
“public debt” means all liabilities of the Executive Government and other branches of Government, but does not include liability where the Government is trustee for another person, or the liabilities of any statutory body;
“public interest” means something that is to the advantage, direct or indirect, of the people of Malawi;
“public money” means all money, other than trust money, received by the Government, including all revenue, grants, loans and other moneys, and all bonds, debentures, and any other securities received by, or on account of, or payable to, or belonging to, or deposited with the Government or any Ministry by—
(a) any officer of Government in his capacity as such; or
(b) any person on behalf of Government;
“public resources” means all real or personal property that belongs to or is owned or held by the State or held by any Ministry, agency or other person for and on behalf of the State or the Government;
“public securities” means securities representing the investment, or securing the payment, of any public money;
“records” means information recorded and kept by any means, and includes all books, accounts, rolls, files, vouchers, receipts, cheques, records, registers, papers, documents, photographic plates, microfilms photo static negatives prints, tapes, disks, computer reels, diskettes and hard disk, perforated rolls, and any other type of written, printed, copied, magnetic tape, electronic data record or other information whatsoever, and all papers and other records relating to accounting operations and practice or information recorded and kept by any means;
“revenue” means all non-repayable Government receipts;
“Secretary to the Treasury” means the Principal Secretary having supervision for the time being of the Ministry of Finance;
“State” means the independent State of Malawi, established under the Constitution and includes the Government;
“statutory body” means a body of persons, whether corporate unincorporated, other than the Reserve Bank of Malawi, established by any written law, and includes a Council established under the Local Government Act, and any corporation or a subsidiary of a corporation where the Government, directly or indirectly—
(a) controls the composition of any board of directors of the body; or
(b) controls more than fifty per cent of the voting power of the body; or
(c) holds more than fifty per cent of any of the issued share capital of the body either directly or through another agency or statutory body (excluding any part of it that carries no right to participate beyond a specific amount in a distribution of either profits or capital);
“statutory expenditure” means—
(a) expenditure which is not subject to the vote of the National Assembly; and
(b) expenditure charged on the Consolidated Fund under the provisions of the Constitution or charged on the Consolidated Fund or any other public fund or account by any other written law in which it is expressly stated to be statutory expenditure;
“trading revenue” means the revenue received from the supply of goods or services in a contestable environment;
“transactions on behalf of the State” or “payments on behalf of the State” means the categories of appropriations listed in section 23 (3) (c), (d) and (e);
“Treasury Instructions” means Treasury Instructions issued under section 92;
“trust account” means a trust account established under section 41;
“Trust Fund” means the Trust Fund established under section 41;
“unclaimed money” means unclaimed money defined under section 44;
“Vote” means a sum of money authorized to be spent under section 23 (2).
RESPONSIBILITY FOR FINANCIAL MANAGEMENT
(1) The Minister is responsible to the Cabinet and to the National Assembly for—
(a) the preparation and presentation of economic and fiscal policy in accordance with this Act;
(b) ensuring adequate procedures, internal controls and guidelines exist for the use of public money and public resources; and
(c) the compliance by the Ministry of Finance with its responsibilities under this Act.
(2) When submitting the draft Estimates to Cabinet the Minister shall provide—
(a) a detailed assessment of the economic and fiscal impact of the projected revenue in relation to the projected expenditure contained in the Budget Policy Statement required under section 15; and
(b) where appropriate, details of options to change the draft Estimates including details of possible changes in Government expenditure and programmes to make them compatible with the Budget Policy Statement.
The Minister is responsible for—
(a) the formulation of economic and fiscal policy of the Government of Malawi, and for the financial management of ongoing operational activities, both annually and for such longer periods as he considers appropriate, specifying agreed policies, outcomes and outputs to be achieved, and taking into account the views of prior policy consultations;
(b) the preparation of the annual draft Estimates and such other Estimates as may be necessary and overseeing their implementation on behalf of the Government;
(c) the supervision of the finances, assets and liabilities of the State so as to ensure that a full accounting is made to the National Assembly of all transactions involving public moneys or the disposition of public resources;
(d) the oversight of the finances of statutory bodies; and
(e) the publication in the Gazette and by whatever other means he considers appropriate, of information as to economic plans and projects approved by the National Assembly or Government and the progress made in their implementation.
(1) Subject to subsection (2), the Minister may in writing delegate his powers under this Act where he is unable, for the time being, to exercise those powers.
(2) The Minister shall not delegate any power under subsection (1) where this Act prohibits the power of delegation.
(3) The responsibility of the Minister under this Act shall not be derogated merely by his having exercised his power of delegation under this section.
(1) Each Minister of Government is responsible to Cabinet and the National Assembly for ensuring that Controlling Officers coming within the area of the assigned responsibilities of the Minister comply with their responsibilities under this Act for the effective and efficient financial management of all public money and public resources under their control.
(2) Each Minister shall ensure that all estimates of revenue and expenditure provided from entities that comprise the assigned responsibilities of the Minister are realistic, practicable and fully consistent with the budget policy statement of the Government published under section 15.
(3) Each Minister shall ensure that the financial management of the public money and public resources that are allocated to the assigned responsibilities of the Minister in an Appropriation Act achieves the objectives and outputs approved for each vote.
(4) Each Minister shall ensure compliance with all reporting responsibilities coming within the assigned area of responsibility of the Minister under this Act.
(1) There shall be the office of Secretary to the Treasury, who shall be the principal financial adviser to the Government and the administrative head of Treasury, responsible for the administration of this Act.
(2) The Secretary to the Treasury shall report and is responsible to the Minister for compliance by Treasury with its obligations under this Act.
In addition to the responsibilities of Controlling Officers set out in section 10 (with the necessary modifications to paragraphs (k) and (o) in subsection (1)), the Secretary to the Treasury is responsible for—
(a) providing economic, fiscal and financial advice to and assisting the Minister in presenting the draft Estimates, supplementary Estimates and periodic and annual financial statements for Government;
(b) setting policies, practices and procedures for all financial management;
(c) providing the information required by this Act in accordance with generally accepted accounting principles;
(d) monitoring the accounting systems for Government;
(e) coordinating and monitoring systems of financial management, internal control and reporting in all Government ministries;
(f) exercising and maintaining control and direction of all matters relating to the financial management of the Government in accordance with Government policy as communicated by the Minister; and
(g) collection of revenue owing to the State.
(1) Subject to subsection (2), and excepting his powers under Part VII, the Secretary to the Treasury may in writing delegate to a senior officer of Treasury his powers under this Act so as to ensure the effective and efficient operation of the Treasury, or where he is unable, for the time being, to exercise any powers under this Act.
(2) The Secretary to the Treasury shall not delegate any power under subsection (1) where this Act prohibits the power of delegation.
(3) The responsibilities of the Secretary to the Treasury under this Act shall not be derogated merely by his having exercised his power of delegation under this section.
(1) Each Controlling Officer is responsible for ensuring that, in relation to his Ministry—
(a) the provisions of this Act are complied with;
(b) advice on financial management is provided to the responsible Minister;
(c) all accounts and records relating to the functions and operations of the Ministry are properly maintained;
(d) all necessary precautions are taken to safeguard the collection and custody of public money;
(e) all expenditure, including salaries and other personal emoluments, is properly authorized and applied to the specific purposes for which it is appropriated;
(f) there is no over-expenditure or over-commitment of funds and a review is undertaken each month to ensure that there is no such over-expenditure or over-commitment;
(g) the collection of public moneys is according to approved plans and the Estimates;
(h) all expenditure is incurred with due regard to economy, efficiency and effectiveness and the avoidance of waste;
(i) all necessary precautions are taken to safeguard public resources;
(j) any tax, duty, fee, levy or other charge imposed by legislation for which the Ministry is responsible is collected promptly and to the fullest extent;
(k) any tax, duty, fee, levy or other charge imposed by legislation for which the Ministry is responsible is reviewed and reported upon in the format specified by the Secretary to the Treasury or in Treasury Instructions at least once in each year in order to establish—
(i) whether the level of such tax, duty, fee, levy or other charge is adequate; and
(ii) whether such tax, duty, fee, levy or other charge should be varied and, if so, by what amount;
(l) any proposal to charge for the supply of goods or services confirms that the charge is consistent with the economic and fiscal policy of the Government;
(m) any financial information required by any Standing Committee of the National Assembly is submitted to that Committee accurately and promptly;
(n) estimates and forecasts in respect of collection and expenditure of public moneys are prepared in the format specified in Treasury Instructions;
(o) after the first six months of each financial year and at such other times as required by the Secretary to the Treasury he shall submit reports, as may be specified in Treasury Instructions, of the management of funds provided for the achievement of the outputs of the Ministry and the collection of revenues;
(p) an effective system of internal control is developed and maintained and, unless the Secretary to the Treasury approves otherwise in circumstances provided for in Treasury Instructions, an effective internal audit function is developed and maintained; and
(q) all officers in his Ministry are aware of their duties and responsibilities under this Act and any other written law for which the Ministry is responsible.
(2) The responsibility of a Controlling Officer under subsection (1) is not derogated or reduced by reason of any delegation of functions by him to another person.
(3) Responsibilities other than those listed in subsection (1) may be conferred or imposed on a Controlling Officer by this or any other Act.
(4) A Controlling Officer in breach of his responsibilities under this section is liable to disciplinary action under section 87.
(1) The Secretary to the Treasury has power—
(a) to obtain full and free access at all times to all accounts and records of Controlling Officers that relate, directly or indirectly, to—
(i) the collection, receipt, expenditure, issue or use of public money; and
(ii) the receipt, custody, disposal, issue or use of public resources,
and to inspect and inquire into and call for any information arising from, those accounts and records; and
(b) where he has reason to believe that a Controlling Officer has been or may have been in breach of this Act, recommend to the Secretary of the Office of the President and Cabinet that the Controlling Officer be suspended from all financial duties and responsibilities, pending an investigation.
(2) In the exercise of his powers under this section, the Secretary to the Treasury may appoint any person by writing under his hand to inquire into and report to him on any matter or matters specified in the instrument of appointment.
ECONOMIC, FISCAL AND FINANCIAL POLICY
(1) Subject to subsection (4), the Government shall pursue its policy objectives in accordance with the principles of responsible fiscal management specified in subsection (2).
(2) The principles of responsible fiscal management are—
(a) managing total public debt at prudent levels so as to provide a buffer against factors that may impact adversely on the level of total public debt in the future;
(b) ensuring that within any borrowing programme the total overall expenditures of the State in each financial year is in the public interest and designed to achieve long-term fiscal stability;
(c) achieving and maintaining levels of the State’s net worth that provide a buffer against factors that may impact adversely on the State’s net worth in the future;
(d) managing prudently the fiscal risks facing the State;
(e) pursuing policies that are consistent with a reasonable degree of predictability about the level and stability of tax rates for future years; and
(f) agreement of Government on the fiscal limits that will apply to the current and future financial expenditure on Ministries and Government projects.
(3) The Government may depart from the principles of responsible fiscal management specified in subsection (2) only in cases of exceptional circumstances, and when the Government does so—
(a) any such departure shall be temporary; and
(b) the Minister shall specify—
(i) the detailed reasons for the Government’s departure from those principles, including justification of those exceptional circumstances;
(ii) the approach the Government intends to take to return to those principles; and
(iii) the period of time that the Government expects to take to return to those principles.
(4) Where such exceptional circumstances arise which force a departure from the principles of responsible fiscal management specified in subsection (2) during the financial year, those exceptional circumstances shall be disclosed to the National Assembly forthwith if the Assembly is in session, and if not, at the commencement of the next ensuing session, and the exceptional circumstances shall also be included in the next ensuing economic and fiscal update.
Financial reports, financial statements, associated information and accounting procedures required by this Act shall be in accordance with generally accepted accounting practice.
(1) The Minister shall submit to the National Assembly and publish, not later than 1st April of each year, an economic and fiscal policy statement for the financial year commencing on 1st July after publication, and forecasts for the two years following that financial year, and the economic and fiscal policy statement shall—
(a) specify the economic and fiscal policy that the Government will follow in all economic and fiscal dealings, and disciplines that the Government will adhere to;
(c) specify the broad strategic priorities by which the Government will be guided in preparing the Estimates for that fiscal year; and
(2) The economic and fiscal policy statement shall also—
(a) assess the extent to which the objectives, priorities, and intentions referred to under subsection (1) are consistent with the requirement to produce a fiscally responsible budget under section 12 (2) (b); and
(b) assess the consistency of the objectives, priorities, and intentions referred to under subsection (1) with the objectives, priorities, and intentions indicated in the immediately preceding economic and fiscal policy statement, or, if amended, the amended statement and, where these are not consistent, justify the difference.
(3) Any member of the public may, within twenty-eight days of the economic and fiscal policy statement being published, deliver in writing to the office of the Minister any submission that that person may have in respect of that statement.
(1) The Minister shall lay before the National Assembly, with the Estimates, a written budget policy statement.
(2) The budget policy statement shall include—
(a) a budget message, which shall include such supporting financial, statistical, output performance, and other information, data and recommendations as the Minister may determine are in the public interest and consistent with the principles of fiscal responsibility set out in section 12; and
(b) a statement, including forecasts, providing a projection of expenditures for each category of outputs for the ensuing financial year and the two years following that financial year including—
(i) the details of the estimated revenue of the Government;
(ii) the details of the estimated expenditures of the Government;
(iii) the Government’s debt management responsibilities and, where applicable, the details of a financial plan to meet those responsibilities; and
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