US embassy cable - 04LILONGWE240

PARLIAMENT APPROVES SUPPLEMENTARY BUDGET AND CORRUPT PRACTICES AMENDMENT BEFORE DISSOLUTION

Identifier: 04LILONGWE240
Wikileaks: View 04LILONGWE240 at Wikileaks.org
Origin: Embassy Lilongwe
Created: 2004-03-25 05:45:00
Classification: UNCLASSIFIED//FOR OFFICIAL USE ONLY
Tags: PGOV ECON EAID MI Anti Corruption Bureau BUD FIN Economic Parliament
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 LILONGWE 000240 
 
SIPDIS 
 
SENSITIVE/ 
NOFORN 
 
E.O. 12958: N/A 
TAGS: PGOV, ECON, EAID, MI, Anti Corruption Bureau, BUD FIN, Economic, Parliament 
SUBJECT: PARLIAMENT APPROVES SUPPLEMENTARY BUDGET AND 
CORRUPT PRACTICES AMENDMENT BEFORE DISSOLUTION 
 
REF: A. 03 LILONGWE 1309 
     B. 03 LILONGWE 1295 
     C. 03 LILONGWE 1202 
     D. 03 LILONGWE 851 
 
SUMMARY 
-------- 
1. (SBU/NF) Before Parliament's March 20 dissolution, the 
House passed the controversial "compromise" version of the 
Corrupt Practices amendment, a supplementary budget, and 
other minor pieces of legislation.  At present, the 
"compromise amendment" appears sufficient to fulfill the 
IMF's relaxed structural requirements and to placate 
bilateral donors eager to disburse budgetary support to the 
GOM.  The supplementary budget, an MK 11.339 billion 
(approximately USD 105 million) increase to the MK 56.812 
billion (USD 600 million) budget already in place, has been 
made necessary by continued government borrowing from the 
domestic market and overspending by government agencies. 
Increasing nearly MK 8 billion (USD 75 million), interest 
payments on domestic debts are the largest expenditure and 
are expected to rise to more than MK 16.1 billion (USD 150 
million).  Driven by a tight deadline, the House displayed 
rare efficiency in this last planned session before May's 
presidential and parliamentary elections, and the session was 
filled with pertinent debate on the eve of its closure.  END 
COMMENT. 
 
CORRUPT PRACTICES AMENDMENT PASSES 
---------------------------------- 
2. (SBU) A topic of public discussion since its referral to 
the Legal Affairs Committee during the December parliamentary 
session, the Amendment to the Corrupt Practices Act passed on 
March 18 did not include provisions to allow the 
Anti-Corruption Bureau (ACB) to prosecute cases without 
consent from the Director of Public Prosecutions (DPP). 
Submission of an amendment with such provisions was 
originally required as a structural condition of the IMF's 
second review (reftel B).  The "compromise" version of the 
Amendment, which emerged and which was the subject of 
uncharacteristically passionate debate in the House, requires 
the DPP to make a decision on prosecution of ACB cases within 
21 days of their submission to the DPP, and, if consent is 
withheld, the DPP must justify to Parliament the refusal with 
"clear reasons for the decision." 
 
3. (SBU/NF) According to an IMF team member, the current 
formulation of the Amendment is "legally sufficient" to 
satisfy the IMF's required "prior actions" for its next 
review, even though it would not have satisfied the original 
structural condition.  (COMMENT:  Although we are unclear 
about who the GOM "compromised" with, the UK, Norway, and the 
EU all appear satisfied with progress on this condition.) 
 
SUPPLEMENTARY BUDGET OF USD 105 MILLION 
--------------------------------------- 
4. (SBU) Parliament accepted without changes the 
supplementary budget of MK 11.339 billion (USD 105 million) 
presented by Minister of Finance Friday Jumbe on March 15. 
Jumbe blamed the bulk of the continued domestic borrowing on 
the donors' delays in disbursing budgetary support and 
resulting higher interest rates.  He also admitted to some 
over-expenditures, which occurred in spite of automatic 
triggers put in place to reduce spending if donor funding was 
not received, by saying it was "technically impossible" to 
reduce spending by some government agencies.  Jumbe explained 
that to-date over-expenditures of MK 3.008 billion (nearly 
USD 28 million) were concentrated in the Office of President 
and Cabinet, State Residences, the National Assembly, Foreign 
Affairs, Police, and Special Activities.  (NOTE: It has 
already surfaced that the supplementary budget approved by 
Parliament did not include the USD 10 million gap in 
elections funding that the Electoral Commission informed the 
donor community about on March 22, to be reported septel.) 
 
5. (U) Robust debate in the House and in public venues 
criticized the GOM for not reducing domestic debt and not 
increasing funding for pro-poor expenditures.  Leader of 
Opposition, Malawi Congress Party (MCP) MP (and presidential 
candidate) John Tembo, made a compelling speech that 
denounced the ruling United Democratic Front's lack of fiscal 
discipline and called for the budget to be reviewed by the 
Budget and Finance Committee of Parliament.  Civil society 
activists also lamented that the current government spends 
more on domestic debt servicing than on pro-poor 
expenditures, including education and health. 
 
OTHER MINOR PIECES OF LEGISLATION 
--------------------------------- 
6. (U) In addition to the Corrupt Practices Amendment and the 
supplementary budget, the House approved a loan from the 
Kuwait Fund for Arab Economic Development for construction of 
a road, an International Development Association Loan, 
commencement of rural electrification projects, and an 
amendment regarding community-friendly natural parks and 
wildlife management. 
 
DISSOLUTION OF THE HOUSE 
------------------------ 
7. (U) As constitutionally mandated, the House was dissolved 
on March 20 in advance of the May 18 elections.  The 
dissolution of Parliament marks the beginning of the official 
campaign period, allowing candidates and parties to legally 
campaign.  (NOTE: Although Parliament has officially been 
dissolved, the House can be re-convened if deemed necessary 
by the Speaker.) 
 
COMMENT 
------- 
8. (SBU) Driven by deadlines, the House was 
uncharacteristically efficient and filled with legitimate 
debate on the eve of its closure.  The particularly 
passionate addresses given by members of the opposition 
regarding the Amendment to the Corrupt Practices Act (in 
favor of the Anti-Corruption Bureau's independence) 
represented genuine democratic discourse in a House normally 
dominated by the ruling party's agenda. 
BROWNING 

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