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Introduction
The 2006/2007 Budget Analysis report is prepared by the Malawi Economic Justice Network (MEJN) to help Civil Society, Parliamentary Committees and other stakeholders to understand the National Budget for 2006/07 as tabled in the National Assembly on 16th June, 2006. It reviews the implementation of and brings out the salient issues from the 2005/2006 Budget and offers a quick synopsis of the 2006/07 Budget. Recommendations from this report will be submitted to the Budget and Finance Committee of Parliament for inclusion into its submission to the National Assembly and to other Members of Parliament. This approach assures us that the contributions from 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 Government of Malawi is still in the process of developing the Malawi Growth and Development Strategy (MGDS). The MGDS will be the Government’s overall development strategy for the next fiveyears from 2006/07-2010/11. Its main objective is to promote high economic growth, wealth and employment creation as a sustainable basis for poverty reduction.
The 2006/07 Budget has been formulated within the framework of the MGDS. The stated main objective of this budget is domestic debt reduction through further reduction in the fiscal deficit. The Budget also continues to place emphasis on the implementation of the fertilizer and maize seed subsidy programmes, partial retirement of domestic arrears, the purchase of maize locally, implementation of the ADMARC Restructuring Programme, and tax reforms. Furthermore, the Budget has been designed on the assumption that Malawi will reach the HIPC Completion Point during the middle of this calendar year. This will make Malawi qualify for the HIPC and Multilateral Debt Relief Initiatives (MDRI) which will provide additional resources for poverty spending and domestic debt reduction.
This report reviews the implementation of the 2005/2006 Budget and analyses the implications of tax measures announced by the Minister of Finance in his 2006/2007 Budget Statement. Based on these analyses, the report gives recommendations on various issues arising from them.
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