US embassy cable - 05LILONGWE577

UNCLAS LILONGWE 000577 
 
SIPDIS 
 
STATE FOR AF/S, INR/AA 
MCC FOR KEVIN SABA 
STATE FOR EB/IFD/OMA FRANCES CHISHOLM 
TREASURY FOR INTERNATIONAL AFFAIRS/AFRICA/BEN CUSHMAN 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, KDEM, PREL, PGOV, KCOR, MI, Political, BUD FIN 
SUBJECT: PARLIAMENT RECONVENES TO FOCUS ON BUDGET 
 
REF: A. LILONGWE 00508 
     B. LILONGWE 00540 
     C. LILONGWE 00555 
 
1. Parliament reconvened on Thursday, July 7, to focus on 
passing the budget for 2005/06.  This is the first meeting of 
Parliament since the late Speaker collapsed on the floor of 
the House on June 23 during debate over Presidential 
impeachment procedures.  MPs seemed focused on addressing the 
budget more seriously, as they decided to discuss only the 
budget through July 15. 
 
2. The House voted unanimously to focus on the budget for the 
next seven days.  The First Deputy Speaker will serve as 
Speaker until the 18th, when they will elect a new Speaker. 
MPs also unanimously passed a motion to approve a continuing 
resolution, giving approval for government spending from July 
1 - September 30th. The Opposition Spokesperson on Finance 
then gave his response to the budget, in which he called for 
a universal fertilizer subsidy, a decrease of two to four 
percent for the VAT tax, and an bigger raise for the civil 
service. 
 
3. Comment: It is a good sign that Parliament has decided to 
focus only on the budget, with the hope that it will be 
passed by the end of next week.  MPs seem to have gotten the 
message that donors, civil society, and the public at large 
have been trying to get across.  However, if Government 
compromises on the fertilizer subsidy, and implements an 
expensive universal subsidy without cutting costs somewhere 
else, it could cause macro-economic problems and hurt their 
chances of concluding a new IMF agreement. 
 
GILMOUR