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Malawi Economic Justice Network

Analysis of the proposed 2005/06 Malawi National Budget

Malawi Economic Justice Network
Contact: mejnll@mejn.mw

July 2005

SARPN acknowledges permission from the Malawi Economic Justice Network to post this document.
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Introduction

The 2005/06 Budget Analysis report is prepared by MEJN to help the civil society, parliamentary committees and other stakeholders to understand the budget as was tabled in Parliament on 10th June 2005. It gives a quick synopsis of the 2005/06 Budget as well as bringing out the salient issues from the 2004/05 Budget. Recommendations from this report will be submitted to the Budget and Finance Committee for inclusion in their submission to the National Assembly and other members of Parliament. This approach assures us that the contributions from the civil society will contribute to the debate on the Budget in the National Assembly. The report will also be made available to members of the civil society, government officials and donors.

Background

The first three-year Malawi Poverty Reduction Strategy Paper (MPRS) expired in the 2004/05 financial year. The second generation MPRS is still in the making and it is not certain whether it will be called MPRSP or something else. The 2005/06 Budget is therefore the first one presented without the backing of the MPRSP. However, the budget is said to have taken into consideration elements of the MPRS through the Malawi Economic Growth Strategy (MEGS), which is an offshoot of the MPRS. The immediate consequence of this is that all the Protected Pro-poor Expenditures (PPE) that used to fall under Pillar 3 "improving the quality of the most vulnerable" have been discontinued. The two PPEs under this Pillar were the "Safety Nets MASAF" and the Targeted Input Programme (TIP). The Presidential Budget Speech categorically specified that Government and Malawi's developing partners have decided to discontinue the practice of providing free distribution of inputs. The move is towards subsidising the inputs instead of giving free handouts.

However, the principle of protecting some pro-poor expenditure seems to have come to stay since some of the PPEs are still there in the 2005/06 Budget. It is to be assumed therefore that for all the other budgetary allocations the same principles embedded in the MPRSP and the MEGS still apply.



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