Budget Document No. 3 Government of Malawi DRAFT 2018/19 FINANCIAL STATEMENT Ministry of Finance, Economic Planning and Development P.O. Box 30049 Lilongwe ii 2018-19 Financial Statement DRAFT 2018/19 FINANCIAL STATEMENT iii 2018-19 Financial Statement iv 2018-19 Financial Statement Table of Contents Abbreviations and Acronyms .......................................................................................................................... viii 1. INTRODUCTION .......................................................................................................................................... 9 2. THE 2016/17 FISCAL YEAR PERFORMANCE.............................................................................................. 10 2.1 Revenue and Grants ......................................................................................................................... 12 2.1.1 Domestic Revenue ................................................................................................................... 12 2.1.2 Grants ....................................................................................................................................... 13 2.2 Expenditure and Net Lending .......................................................................................................... 14 2.2.1 Recurrent Expenditure ............................................................................................................. 15 2.2.2 Development Expenditures ...................................................................................................... 15 2.3 Overall Balance ................................................................................................................................ 15 3. THE 2017/18 FISCAL YEAR PERFOMANCE ................................................................................................ 16 3.1 Revenue and Grants ............................................................................................................................... 18 3.1.1 Domestic Revenue .......................................................................................................................... 18 3.1.2 Grants .............................................................................................................................................. 19 3.2 Expenditure and Net Lending ................................................................................................................ 20 3.2.1 Recurrent Expenditure .................................................................................................................... 20 4 THE 2018/19 BUDGET ESTIMATES ................................................................................................................ 22 4.1 Revenue and Grants ......................................................................................................................... 24 4.1.1 Domestic Revenue ................................................................................................................... 24 4.1.2 Grants ....................................................................................................................................... 24 4.2 Expenditure and Net Lending .......................................................................................................... 24 4.2.1 Recurrent Expenditure ............................................................................................................. 24 4.2.1 Transfers to Local Councils ....................................................................................................... 25 4.2.2 Development Expenditures ..................................................................................................... 26 4.3 Overall Balance ................................................................................................................................ 26 5 PUBLIC DEBT PORTFOLIO AS AT 31ST DECEMBER 2017 ........................................................................... 27 External Public Debt (EPD) ......................................................................................................................... 27 5.1.1 External Debt by Holder. ................................................................................................................. 27 5.2 Domestic Public Debt (DPD) ................................................................................................................. 28 5.3 External Debt Sustainability .................................................................................................................. 30 5.4 Cost and Risk Analysis ........................................................................................................................ 30 5.5 Domestic Contingent Liabilities ............................................................................................................ 32 v 2018-19 Financial Statement Tables Table 1: 2016/17 Budget Estimates and Outturn (K' millions) ........................................................................ 10 Table 2: 2017/18 Budget Performance (K' millions) ........................................................................................ 17 Table 3: 2018/19 Budget Framework (K' millions) .......................................................................................... 22 Table 4: Transfer to Councils by Sector in the 2018/19 Financial Year (K) ...................................................... 25 Table 5: Evolution of Public Debt (in Millions) ................................................................................................. 27 Table 6: Total External Debt by Holder as at End-December 2017 (USD) ....................................................... 28 Table 7: External Debt Burden Indicators (using current external debt as of December 2017....................... 30 Table 8: Interest rates ...................................................................................................................................... 30 Table 9: Cost and Risk Indicators for existing debt (end-December 2017) ..................................................... 31 Figures Figure 1: Domestic Revenue ............................................................................................................................ 13 Figure 2: Grants Performance by Category...................................................................................................... 14 Figure 3: Expenditure Performance by Category ............................................................................................. 14 Figure 4: Domestic Revenue by Category ........................................................................................................ 19 Figure 5: Grants by Category ........................................................................................................................... 19 Figure 6: Total Expenditure and Net Lending .................................................................................................. 20 Figure 7: Domestic Debt Stock by Instrument as at end-December 2017 ...................................................... 29 Figure 8: Gross Domestic Borrowing by Holder end December 2017 ............................................................. 29 Figure 9: Maturity (Redemption profile) ......................................................................................................... 31 Annexes ANNEX 1: 2017/18 APPROVED ESTIMATE, REVISED BUDGET, AND 2018/19 MEDIUM TERM EXPENDITURE FRAMEWORK (K’ MILLIONS) ............................................................................................................................ 33 ANNEX 2: SUMMARY OF 2017/18 APPROVED, REVISED BUDGET AND 2018/19 MEDIUM TERM EXPENDITURE FRAMEWORK: PERSONAL EMOLUMENTS ................................................................................ 35 ANNEX 3: SUMMARY OF 2017/18 APPROVED, REVISED BUDGET AND 2018/19 MEDIUM TERM EXPENDITURE FRAMEWORK: ORT ................................................................................................................... 38 ANNEX 4: SUMMARY OF 2017/18 APPROVED, REVISED BUDGET AND 2018/19 MEDIUM TERM EXPENDITURE FRAMEWORK: TRANSFERS TO SUBVENTED ORGANISATIONS ................................................. 41 ANNEX 5: SUMMARY OF 2017/18 APPROVED, 2017/18 REVISED AND 2018/19 ESTIMATES: DEVELOPMENT ......................................................................................................................................................................... 42 ANNEX 6 : SUMMARY OF EXPENDITURE BY PROGRAM (K‘MILLION) .............................................................. 62 ANNEX 7: OVERALL SUMMARY OF ESTIMATES AT ITEM LEVEL 2018/19 FINANCIAL YEAR (K’ MILLION) ....... 66 ANNEX 8: REVENUE OVERVIEW ....................................................................................................................... 68 vi 2018-19 Financial Statement ANNEX 9: DEPARTMENTAL RECEIPTS OVERVIEW ............................................................................................ 69 ANNEX 10: PUBLIC DEBT DEFINITIONS ............................................................................................................ 70 ANNEX 11: SUMMARY OF 2018/19 OFF-BUDGET SUPPORT ........................................................................... 72 ANNEX 12: SUMMARY OF 2018/19 OFF-BUDGET SUPPORT ..........................................................................