This report argues that publicexpenditure outcomes in Malawi, can be improved in the nextfew years, provided 1) additional spending on priority itemsis balanced by expenditure cut-backs in low priority areas,so that public expenditures remain within fiscal parametersto restore macroeconomic stability; 2) incentives forimproving the budget process are strengthened; 3)intra-sectoral allocations in key sectors, i.e., education,health, agriculture, and roads, focus on key public goods,and, measures to improve spending are enforced; and, 4)areas such as pensions, and parastatals are restructured, soas to reduce future fiscal burden. Balancing additionalspending on priority areas within a macroeconomic framework,will require expenditure restructuring, by limitingnon-essential spending, to reduce the country's overalldeficit, achieve its macro targets, and attain the HeavilyIndebted Poor Countries (HIPC) debt relief finance, whichshould allow additional spending on priority items.Recommendations suggest a shift in expenditures towardssocial sectors, HIV/AIDS control and prevention, roadsmanagement improvement, and, governance to strengthen thebudgetary process. And, savings could be generated byreducing ad-hoc expenditures (e.g., maize priceinterventions), reducing State Officials allocations (e.g.,residences, foreign travel, etc.), and, curbing fraud and corruption.
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