Malawi - Public expenditure review (Vol. 1 of 2) : Executive summary : major findings and recommendations

Report No. 7281-MAI Malawi Public Expenditure Review (In Two Volumes) Volume l: Executive Summary Major Findings and Recommendations Apu1 7,1990 Southem Africa Department FOR OFFICIAL USE ONLY U, Document of the Wold lk This documnent has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents !i,ay not otherwise be disclosed without World Bank authorization.  CURRENCY AND OTHER EQUIVALENTS Annual Average ExchanRe Rate Kwar ha or US Doll r 1984: 1.413 1985 1.719 1986: 1.861 1987: 2.209 1988t 2.561 1989: 2.822 WEIGHTS AND MEASURES 1 cubic foot (cu ft) - 0.0283 cubic meters 1 cubic meter (t3) - 35.3 cubic feet - 264 US gal 1 kilonamter (km) - 1,000 meters - 0.621 miles 1 hectare (ha) - 10,000 square meters - 2.47 acres GLOSSARY OF ABBREVIATIONS ADD - Agricultural Development Division ADMARC - Agricultural Development and Marketing Corporation cHS - Central Medical Stores DEVPOL - Statement of Development Policy 1986-1997 DLVW - Department of Lands, Valuation and Water DPMT - Department of Personnel and Management Training DSB - Department of Statutory Bodies DWSF - District Water Supply Fund EPD - Economic Planning and Development ESCOM - Electricity Supply Commission of Malawi FD - Forestry Department KCH - Kamuzu Central Hospital MDC - Malawi Development Corporation MFNR - Ministry of Forestry and Natural Resources MHC - Malawi Housing Corporation MOA - Ministry of Agriculture MOEC - Ministry of Education and Culture MOF - Ministry of Finance MOH - Ministry of Health MWS - Ministry of Works and Supplies GLOSSARY OF ABBREVIATIONS CON'T NRDP - National Rural Development Programe WCA - National Statistical Office NTC - Northern Transport Corridor PHAM - Private Hospital Association of Malawi PHC - Primary Health Care PSIP - Public Sector Investment Programe PVHO - Private Vehicle Hire Organization QEHC - Queen Elisabeth Centre Hospital RHN - Reserve Bank of Malawi SAL - Structural Adjustment Loan TIa - Traditional Housing Are; - Not applicable - Not available FISCAL YEAR April 1 - March 31  FOR OMCIuL USE ONLY MALAWI PUBLIC EXPENDITURE REVIEW TABLE OF CONTENTS VOLUM4 I Page No. Executive Sunmary ................. i Major Findiags and Recozmendations .1 VOLUM3 II I. Macroeconomic Froe-work for Public Expenditure Strategy . 1 A. Diagnosis of Fiscal Imbalances . . 1 B. Medium-Term Framework. .. 7 II. Intersectoral Public Resource Management Issues .13 A. Balance Between Recurrent and Capital Expenditures ..14 B. Planning, Budgeting, and Expenditure Control Processes.21 C. Wages and Employment .......... ...24 D. Debt .............32 E. Parastatals ........36 III. Sectoral Options .41 A. Sectoral Envelopes ..41 B. Education ..47 C. Health ....55 D. Agriculture and Fisheries . .68 E. Forestry .. 81 F. Transport ....................... .... .......... 90 G. Water ........... . .................................. 95 H. Buildings . ................................ 99 I. Housing ................... .. ........... 100 J. Power ................... 104 Statistical Appendix ............ .............. 108 This report is based on the findings of a core mission that visited Malawi in November/December 1987 and sectoral missions that visited Malawi between September 1987 and March 1988 and reviewed with the Government in October 1988 and June 1989. The missions consisted of Kathie Krumm (task manager, AF6CO), Fred King (AP6CO), Ranjit Teja (IMF), Ercis Kurtulus (Consultant), Tia Duer (AF6PH), Ola Storeng (FRM), Sudhir Shetty (AF6AG), Jane Armitage (AF6AG), Ken Clare (Consultant), Ebenezer Aikins-Afful, (AF6IN), Carolyn Gochenour (AFTIN), and Assefa Telahun (AF6IE). Mr. Steve O'Brien (chief economist) joined and advised the core (AF6CO) mission. This document has a restricted distribution and may be used by recipients only in the perforrnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  INDEX OF TABLES Table Page No. VOLLt I Maior Findings Table 1.: Macroeconomic Framework, 1988/89-1992/93 . . 6 Table 2.t Sectoral Programs: Comparison with Budget Shares ....... 13 VOLU1M _I I. Macroeconomic Framework I.A.1 Flow of Funds, 1980-88 .... 2 I.A.2 Comparison of Original Estimate, Revised Approved and Actual Expenditures, 1982/83-1987188 ..................... 6 I.B.1 Flows of Funds 1988/89-1992/93 Less Constrained Scenario . ......................... 10 I.B.2 Flow of Funds, 1988/89-1992/93 Ccuservative Scenario . ............................. 10