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Viewing cable 07LILONGWE715, MALAWI: PRESIDENT WINS BUDGET APPROVAL, THEN

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Reference ID Created Released Classification Origin
07LILONGWE715 2007-09-18 12:27 2011-08-26 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Lilongwe
VZCZCXRO0506
OO RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHLG #0715/01 2611227
ZNR UUUUU ZZH
O 181227Z SEP 07
FM AMEMBASSY LILONGWE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4639
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHLMC/MCC WASHDC
RUEAIIA/CIA WASHDC
RUEATRS/DEPT OF TREASURY WASH DC
UNCLAS SECTION 01 OF 03 LILONGWE 000715 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR AF/S 
STATE FOR INR/AA 
MCC FOR MALIK CHAKA 
 
E.O. 12958: N/A 
TAGS: PGOV KDEM EAID EFIN MI
SUBJECT: MALAWI: PRESIDENT WINS BUDGET APPROVAL, THEN 
DISSOLVES PARLIAMENT 
 
REF: LILONGWE 646 
 
LILONGWE 00000715  001.2 OF 003 
 
 
1. (SBU) Summary: After nearly four months of political 
confrontation, Malawi's Parliament passed the USD 1.24 
billion national budget on September 11 -- a major victory 
for President Mutharika.  The prudent, pro-poor budget is 
consistent with the President's Malawi Growth and Development 
Strategy (MGDS) and should contribute both to continued 
poverty reduction and macroeconomic stability.  Even most 
opposition MPs recognized the successful economic policy of 
the GOM to date.  Opposition parties, once focused on 
financial matters, raised several valid concerns about the 
budget and secured government concessions to commercialize 
the national radio and television networks, and to increase 
discretionary funds to MPs for projects in their own 
districts.  Prior to passage of the budget, the government 
had agreed to remove injunctions preventing the Speaker of 
the National Assembly from acting on Section 65 of the 
Constitution.  The provision could require up to 40 of 71 the 
ruling Democratic Progressive Party's (DPP) MPs to vacate 
their seats because they crossed the aisle after being 
elected under opposition party banners.  Before the Speaker 
could act, however, President Mutharika exercised his 
constitutional authority to dissolve Parliament, prompting 
charges of bad faith from the opposition and other observers. 
 The President's action, while apparently legal, may cost him 
some of increased popular support his party gained by 
standing firm during the budget approval process.  End Summary 
 
------------------- 
FINALLY -- A BUDGET 
------------------- 
 
2. (SBU) Parliament passed Malawi's national budget September 
11, ending a protracted process that began on May 21 and was 
stopped three times due to a one-month period of mourning 
following the First Lady's death, a political impasse, and 
several court injunctions (reftel).  Once the National 
Assembly finally resumed meetings on August 13, the 
constitutionally required three-week budget debate period 
proceeded in a generally constructive atmosphere, concluding 
on August 31.  The National Assembly's subsequent process for 
approving each line item of the budget typically has taken no 
more than two days to complete, but this year required seven 
days as the opposition used its numeric superiority in the 
Assembly to force the delay of key votes.  The most contested 
vote was the line item for the Subvention to Statutory 
Organization, which funds state-owned organizations. 
Throughout the budget process, both the Malawi Congress Party 
(MCP) and the United Democratic Front (UDF) accused the 
government of using the state-owned broadcasters, Malawi 
Broadcasting Corporation (MBC) and Television Malawi (TVM), 
to spread anti-opposition propaganda.  Government in the end 
decided to concede to the commercialization of the two 
networks, reducing the government funding of each 
organization to one Malawian kwacha and moving MK 360 million 
(USD 2.5 million) back to the Ministry of Finance.  (Further 
implications of the commercialization of the only national 
radio and television networks in Malawi will be covered in 
septel.)  In addition to state organizations, the Ministry of 
Information and Civic Education and the Anti-Corruption 
Bureau (ACB) budgets were also delayed by opposition until 
the government opened investigations into possible corruption 
by the organizations' heads, Information Minister Patricia 
Kaliati and ACB Acting Director Tumalisye Ndovi respectively. 
 
----------------------------- 
PRO-POOR AND FISCALLY PRUDENT 
----------------------------- 
 
3. (U) In his statement to conclude the budget debate, 
Minister of Finance Gondwe highlighted how the budget 
implemented President Mutharika's Malawi Growth and 
Development Strategy (MGDS) framework, as well as the 
budget's sound macroeconomic base.  Gondwe also specifically 
addressed all key issues raised by opposition members during 
the debate, pointing out where underlying claims or 
assumptions were incorrect, but also noting when valid 
criticisms had been made.  One noteworthy example was his 
agreement with the opposition to increase the constituency 
funds of members which can be used for local projects, but he 
insisted the increase in funds not come at the expense of 
fiscal discipline.  Among the economic achievements Gondwe 
underscored were reduced inflation (7 percent currently and 
 
LILONGWE 00000715  002.2 OF 003 
 
 
headed  below five percent), positive real GDP growth (8.5 
percent last year and 6 percent expected this year), a 
reduction of poverty in urban areas, increased food supplies 
and storage ability in rural areas, diversification of 
agriculture away from maize to exportable cash crops, and an 
increase in the proportion of technical and capital goods as 
a percentage of imports.  Approximately 28% of the budget is 
being allocated to the four pillars agreed upon in the Malawi 
Poverty Reduction Strategy Paper (PRSP) developed during the 
Heavily Indebted Poor Country (HIPC) qualification process: 
pro-poor growth, human capital development, improving the 
quality of life of the most vulnerable, and good governance. 
Senior opposition leaders, including the shadow finance 
ministers of both major parties, reluctantly acknowledged the 
GOM's economic success in their Parliamentary interventions 
and offered few substantive objections to current economic 
policy. 
 
------------------------------------ 
PRESIDENT TAKES THE MONEY, THEN RUNS 
------------------------------------ 
 
4. (SBU) The final budget vote was not completed until the 
government provided proof to opposition members that it had 
withdrawn the injunction it had earlier obtained to stop the 
Speaker of the Assembly from acting on Section 65 of the 
Constitution.  The provision could require up to 40 of 71 the 
ruling Democratic Progressive Party's (DPP) MPs to vacate 
their seats because they crossed the aisle after being 
elected under opposition party banners.  All goodwill that 
had developed between the government and the opposition with 
the removal of the injunctions disintegrated on September 14, 
however, when President Mutharika suddenly exercised his 
Constitutional authority to "prorogue" (dissolve) the 
National Assembly, thus ending the current session without a 
resolution on Section 65.  The premature closure of the 
National Assembly vindicated opposition leaders who had 
warned that if that Section 65 were not addressed before the 
budget approval, the President would simply take the budget 
and run.  These same leaders railed against the bad faith 
tactics of the Mutharika government after the dissolution of 
Parliament and warned that they would find a way to punish 
the GOM somehow.  They also argued that the President had 
acted unconstitutionally by failing to consult with the 
Speaker as required before the decision to prorogue.  UDF and 
MCP leaders appeared momentarily stunned by the President's 
move, however, and announced no immediate steps they planned 
to take. 
 
5.  (SBU) Parliament's closure will prevent progress in 
filling key vacancies such as Chief Justice of the Supreme 
Court of Appeal, the Auditor General, and the members of the 
Malawi Electoral Commission (MEC).  The nominees for Auditor 
General, MEC, ACB, and the Financial Intelligence Unit have 
all been blocked by the opposition-controlled Public 
Appointments Committee of Parliament or by 
opposition-sponsored litigation, and the President has so far 
been unwilling to nominate more opposition-friendly 
candidates.  The Chief Justice nomination has been announced 
but not considered in Parliament.  Another measure stalled 
was approval of an agreement to connect Malawi's electrical 
grid with Mozambique to share generation capacity and 
alleviate shortages.  It was in fact the MCP's unwillingness 
to move immediately on these measures before addressing 
Section 65 that the GOM cited as justification for proroguing 
Parliament.  The GOM also pointed to the UDF's failure to 
clear up its own injunction against Section 65 promptly and 
continuing delays in Parliamentary business as justifications 
for dissolving the National Assembly.  There has been no 
indication when the President might reconvene Parliament, 
though most expect it will not be before December or January 
at the earliest. 
 
--------------------------------------------- ------------- 
COMMENT: PRESIDENT SACRIFICES COMITY TO CONSOLIDATE POWER 
--------------------------------------------- ------------- 
 
6. (SBU) Comment: President Mutharika has emerged as the 
clear winner in the showdown over the budget, at least in the 
short-term.  His effective use of the "bully pulpit" won 
strong public support for his budget, and also allowed him to 
face down opponents who sought to weaken the President 
severely through Section 65.  Mutharika apparently believes 
he has both time and popular opinion on his side as he heads 
 
LILONGWE 00000715  003.2 OF 003 
 
 
off for three weeks in the U.S. for the UN General Assembly 
and other activities.  While the passing of the budget 
ensures that the executive branch can legally implement its 
successful development strategy for another year, the 
vacancies at Chief Justice, Auditor General, and 
Anti-Corruption Bureau (ACB) Director will hamper the proper 
functioning of government, including the fight against 
corruption.  Perhaps more importantly, the President will 
find it even more difficult to secure future agreements with 
the opposition on important issues in the remaining year and 
a half of his term.  For the moment, however, Mutharika has 
outwitted determined rivals who are more interested in 
defeating him than in Malawi's development.  End Comment. 
EASTHAM