Read 2020/21 Mid-Year Budget Review Statement Here

2020/2021 MID-YEAR BUDGET REVIEW STATEMENT
MOTION

1. Madam Speaker, I beg to move that the Mid-term revised estimates on the Recurrent and Development Accounts for the 2020/2021 Budget of the Malawi Government be reviewed by the Committee of the Whole House, to be considered vote by vote, and that thereafter it be adopted.
   INTRODUCTION
2. Madam Speaker, this August House is invited to note the collection and utilisation of resources during the first half of the 2020/2021 fiscal year; consider and approve how resources that are expected to be available during the second half can be effectively utilised for the country’s economic development and optimization of the welfare of all Malawians.
3. Madam Speaker, the overarching objective of the Tonse Alliance Government as outlined in the 2020/2021 Budget is to achieve sustainable and inclusive economic
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growth; macroeconomic stability and sound financial management. These objectives are pursued through transparency and accountability, rule of law, enhanced resource mobilisation, efficient utilisation of resources and provision of relevant infrastructure. This August House will recall that the 2020/2021 Budget was developed under the theme “Living the Promise”.

4. Madam Speaker, at the time of budget formulation, it was assumed that policy measures and strategies by the Government would result into domestic revenue collection of K1.179 trillion for the 2020/2021 fiscal year. Of this amount, K600.1 billion was projected to be collected during the first half of the financial year. However, at the end of the first half, total domestic revenue collection amounted to K564.2 billion, representing 94.0 percent of the target. For taxes, Madam speaker, actual first half collection amounted to K548.7 billion, representing 96.5 percent of target. It is important to note that this revenue performance has been achieved in the hardest of times characterised by subdued economic activity due to Covid-19 pandemic.
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5. Madam Speaker, on the expenditure side, Honourable Members are invited to note that during the first six months of the fiscal year, Government expenditures were over and above the target of K974.6 billion by 2.5 percent. Among other factors, this is on account of the unforeseen expenditures towards Covid-19 pandemic management and re-administration of the Malawi School Certificate of Education Examinations.
6. Madam Speaker, performance of the budget in the first half as well as projected outturn for the second half have necessitated an upward revision of the expected net domestic borrowing requirement from K530.4 billion in the approved 2020/2021 fiscal budget to K564.4 billion, or 6.1 percent of GDP in the revised budget.
   WORLD AND REGIONAL ECONOMIC OUTLOOK
7. Madam Speaker, according to the January 2021 World Economic Outlook Report by the International Monetary Fund, global economy is projected to grow by 5.5 percent in 2021 and 4.2 percent in 2022, though amidst exceptional uncertainties. These projected growth recoveries
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are fresh on the back of a severe collapse in 2020 that was recorded at minus 3.5 percent.

8. Madam Speaker, the 2021 forecasted growth rebound reflects expectations of a vaccine-powered strengthening of economic activity later in the year and additional policy support in a few large economies. However, the strength of recovery is projected to vary significantly across countries, depending on access to medical interventions, policy effectiveness and exposure to cross- country spill over effects.
9. In Sub-Saharan Africa, Madam Speaker, growth is expected to pick up from minus 2.6 percent in 2020 to 3.2 percent in 2021 and 3.9 percent in 2022. Big economies of South Africa and Nigeria are forecasted to grow by 2.8 percent and 1.5 percent, respectively.
   ECONOMIC DEVELOPMENTS IN MALAWI
10. Madam Speaker, I am pleased to inform the August House that the National Statistics Office completed the rebasing exercise of the country’s GDP. Real GDP is now
    based on 2017 prices and not on 2010 prices as was the case
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when we formulated the 2020/2021 fiscal Budget. The rebasing exercise, Madam Speaker resulted into an increase in the country’s GDP of about 37 percent in 2017.

11. Madam Speaker, this follows the Census of Economic Activities that was conducted and resulted into addition of more economic units into the GDP calculation basket and also removal of some companies that no longer exist. It is therefore important to remember that economic growth rates presented in this revised budget are based on 2017 prices and that all reported ratios to GDP are based on the nominal GDP that is higher and much more reflective of the current economic situation.
12. Madam Speaker, the latest figures indicate that in 2020, the Malawi economy grew marginally by 0.9 percent. This is a downward revision from 1.9 percent growth rate estimate that was used during the 2020/21 budget formulation. This economy, Madam Speaker, continues to suffer from the adverse effects of the coronavirus pandemic which compelled Government to impose containment measures, including partial lockdown and restrictions on
    mobility. Internationally, Malawi’s economic activities have
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been hampered by border closures in neighbouring countries as well as containment measures in major trading partners such as South Africa, Europe and China.

13. Going forward, Madam Speaker, a preliminary GDP growth rate for 2021 is forecasted at 3.5 percent. This is largely on account of the normal to above normal rains that this country has received so far, although localised dry spells are being experienced in some districts mostly in the southern and eastern regions of Malawi. Growth in 2021 will also be significantly bolstered by the expected increase in agriculture output due to the impact of AIP.
14. Madam Speaker, enhanced growth prospects in 2021 are also buttressed by the on-going Government infrastructure development projects in the road, energy and agriculture sectors, most of which are growth enablers. Furthermore, Madam Speaker, just as in many other countries, the Covid-19 vaccine is also expected to spur business and economic confidence. It is however, important to remember that economic growth in 2021 and beyond is dependent on how fast the second wave of the pandemic dissipates.
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15. Madam Speaker, annual headline inflation in 2020 was registered at 8.6 percent, a marked drop from 9.4 percent recorded during 2019. Food inflation at 13.1 percent for 2020 continued to dictate developments in headline inflation, although a noticeable moderation was recorded from 14.3 percent in 2019.
16. Meanwhile, Madam Speaker, non-food inflation has been oscillating around 5.0 percent since the beginning of 2019, and recorded at 4.9 percent in December, 2020, thereby averaging 4.7 percent in 2020 and lower than 5.4 percent registered in 2019. Going forward, annual average headline inflation for 2021 is projected at 7.4 percent, with a December 2021 inflation projection of around 7.0 percent.
17. Madam Speaker, the country’s trade balance continues to worsen. As at end December 2020, trade deficit widened to US$566.7 million from US$352.8 million recorded during the same period in 2019. This is mainly on account of increased imports of items for Covid-19 management as well
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as strategic commodities such as fertiliser under the Affordable Inputs Program.

18. Madam Speaker, as at end December 2020, Gross Official Reserves stood at US$574.3 million, representing 2.8 months of imports, down from US$846.6 million (4.1 months of imports) recorded in December 2019. Consequently, the Malawi Kwacha exchange rate against major trading currencies during the year 2020 experienced some depreciation pressure. From June 2020 to December 2020, the Malawi Kwacha depreciated by about 5.0 percent against the United States dollar.
    MID-YEAR BUDGET PERFORMANCE
19. Madam Speaker, Honourable Members will recall that for the 2020/2021 financial year, this August House approved total expenditure and net lending of K2.190 trillion, while inflows of revenues and grants were approved at K1.435 trillion, giving a total financing requirement of K755.1 billion. Of this financing, K530.4 billion was planned as net domestic borrowing, while K224.8 billion was projected as net foreign financing.
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Revenue and Grants

20. Madam Speaker, of the total annual approved revenue and grants, Government projected that by the end of the first half, a total of K626.3 billion would be realised. This comprised total domestic revenue at K600.1 billion while grants were projected at K26.3 billion. These projections were largely based on economic prospects and commitments by development partners on the part of grants.
    Performance of Domestic Revenue
21. Madam Speaker, as at end December 2020, domestic revenues at K564.2 billion fell short of target by K35.9 billion and represented a performance rate of around 94.0 percent.
    Tax Revenue performance
22. Madam Speaker, out of a tax revenue target of K568.3 billion for the first half, K548.7 billion was realized, representing tax revenue collection performance of 96.5 percent. Impressive performance in tax collection was
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recorded in taxes on income and profit, and capital gains as MRA focussed on enhancing compliance.

23. On the other hand, Madam Speaker, performance of taxes on goods and services fell short of target by 5.4 percent on account of subdued effective demand and rampant non-compliance in domestic VAT. Subdued performance in international trade taxes was also recorded largely on account of low import volumes due to border closures and travel restrictions.
    Non Tax Revenue performance
24. Madam Speaker, the mid-year target for non-tax revenue was K31.8 billion. The outturn at K15.5 billion represented a revenue collection performance of 49.8 percent. This is however expected to rebound as transfers by Treasury Funds and parastatals commence to trickle in towards the end of the fiscal year.
    Performance in Grants
25. Madam Speaker, during the first half of the 2020/2021
    financial year, grants were programed at K26.3 billion.
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However, actual performance was significantly higher at K83.4 billion. This was mainly on account of the increased disbursement of resources by major cooperating partners towards Covid-19 operations and management.

Performance of Expenditure

26. Madam Speaker, Honourable Members are invited to note that major assumptions that underpinned projected first half expenditures included the consideration of seasonal patterns of some activities such as the Affordable Inputs Program, slow start of new projects during the first half of the year as well as the need to balance revenue inflows against expenditure outlays.
27. Madam Speaker, out of the K2.190 trillion of planned expenditure and net lending for the current fiscal year, K974.6 billion was projected to be spent during the first half. This comprised K892.6 billion of recurrent expenditure and K82.0 billion in development expenditure.
28. Madam Speaker, as at end December 2020,
    expenditure outturn was recorded at K998.5 billion consisting
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of K830.1 billion in recurrent expenditure and K168.4 billion in development expenditure. Total expenditure at mid-year surpassed its target by K23.9 billion, largely emanating from the development budget line as recurrent expenditure fell short of its target by K62.5 billion.

Performance of Recurrent Expenditure

29. Madam Speaker, recurrent expenditure during the first half amounted to K830.1 billion, falling short of its target at K892.6 billion, representing a 7.0 percent underspending. Compensation of Employees and Use of Goods and Services recorded marginal overspending of around 0.5 percent and 2.6 percent, respectively, when compared to their mid-year targets.
    Performance of Development Expenditure
30. Madam Speaker, development spending during the first half of the year over performed by K86.4 billion with K83.7 billion emanating from foreign financed component and K2.7 billion from the domestically financed component. Donor- funded development expenditure (Part I) amounted to K115.4 billion against a planned expenditure of K31.6 billion. This
    Madam Speaker, was on account of increased disbursement
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of grants and project loans as a result of picking up in project implementation as well as some projects becoming effective during the course of the period under consideration.
Overall Balance and Domestic Borrowing

31. Madam Speaker, the overall balance during the first half of the year was recorded at negative K351.0 billion, slightly above the planned first half deficit of K348.3 billion due to more than projected disbursement of project loans. This deficit was financed by a net domestic borrowing of K304.0 billion and a net foreign borrowing of K47.0 billion.
32. Madam Speaker, despite the increase in overall balance, the first half net domestic borrowing of K304.0 billion was lower than the projected domestic borrowing of K365.8 billion. This, Madam Speaker and Honourable Members is in contrast to what some commentators have made people to believe that implementation of the budget in the first half was off-track as a result of increased domestic borrowing.
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PROJECTIONS FOR SECOND HALF OF THE 2020/2021 FISCAL YEAR

33. Madam Speaker, the projected budget performance for the second half of the 2020/2021 fiscal year has been drawn with full consideration of developments during the first half, remaining Government payment obligations and expected continued improvement in revenue inflows.
34. During the second half, Madam Speaker, Government will continue with its efforts to enhance domestic revenue collection in order to achieve set targets for smooth budget implementation. In this regard, the Malawi Revenue Authority will continue implementing turnaround strategies aimed at achieving efficiency and enhanced tax payer compliance.
35. Therefore, Madam Speaker, during the second half, total revenue and grants are projected at K875.8 billion of which K621.6 billion is domestic revenue and K254.2 billion are grants. Total expenditure and net lending is projected at
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K1.336 trillion of which K888.1 billion is recurrent expenditure and K447.4 billion is development expenditure.

36. Madam Speaker, of the K888.1 billion recurrent expenditures, K269.3 billion is for wages and salaries, K236.6 billion is for interest payment, K156.9 billion for goods and services and K122.4 billion for social benefits. Under development expenditure, a total of K447.4 billion is projected to be spent during the second half, comprising K395.7 billion foreign financed expenditures (Part I) and K51.6 billion locally financed (Part II).
    PROJECTIONS TO THE END OF THE FISCAL YEAR
    37.Madam Speaker, Honourable Members are invited to note that, ceteris paribus, the budget in the current fiscal year has been revised based on the following major assumptions:
    a.A projected GDP growth rate of 0.9 percent in 2020 and 3.5 percent in 2021;
    b.An average inflation rate of 8.0 percent during the fiscal year; and
    c.A Policy rate of 12.0 percent;
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37. Madam Speaker, Annex II presents the Revised Budget Framework, alongside the 2020/2021 Approved Budget Framework. Total revenues and grants have been revised upwards from K1.435 trillion to K1.523 trillion, representing 16.5 percent of the country’s Gross Domestic Product. Total expenditure and net lending has also been revised upwards from K2.190 trillion to K2.334 trillion. The vote- by-vote adjustments are also presented in Annex III that has been circulated in this August House.
    Domestic Revenue
38. Madam Speaker, there has been a slight upward revision in domestic revenues and are now projected at K1.186 trillion from K1.179 trillion in the approved budget. This is mainly on account of a positive adjustment in Other Revenue as Tax Revenues are projected to remain at K1.116 trillion. Other Revenue (non-tax revenue) are projected to increase from K63.1 billion to K69.6 billion in the revised budget. This is on account of the expected increase in dividends and surpluses.
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Grants

40. Grants, Madam Speaker, are projected to increase from K255.7 billion to K337.5 billion by the end of the fiscal year. This is on account of the increase in resources from development partners which were approved during the course of the fiscal year and have now been included in the budget framework.
    Expenditure Projections
41. Madam Speaker, total expenditure has been revised upwards from K2.190 trillion to K2.334 trillion. Both recurrent expenses and development expenditure lines have been adjusted upwards to K1.718 trillion and K615.8 billion, respectively.
42. Madam Speaker, development expenditure has been increased from an approved provision of K511.2 billion to K615.8 billion, representing an increase of K104.7 billion. Of the K104.7 billion, foreign financed projects amount to K100.8 billion on account of projects which became effective during the course of the financial year. Domestically financed project budget has also been increased from K100.9 billion to
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K104.7 billion on account of increased allocation to finance the new IFMIS project and also to develop detailed designs for the Judicial complex.
Overall Balance and Domestic Borrowing

43. Madam Speaker, on account of developments in both revenues and expenditures, total deficit for the 2020/2021 fiscal year has been revised upwards from K755.1 billion to K810.7 billion, or 8.8 percent of GDP. This deficit is expected to be covered through foreign financing of K246.3 billion, with the balance of K564.4 billion programed to be financed through domestic borrowing.
    HIGHLIGHTS ON KEY EXPENDITURE CATEGORIES
    Wages and Salaries
44. Madam Speaker, the provision for wages and salaries has been revised upwards from its approved amount of K523.7 billion to K525.3 billion, representing an increase of K1.6 billion which is budgeted to finance recruitment of health workers. The Compensation of Employees budget line has also been adjusted upwards on account of an additional K2.5
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billion to the contributory pension scheme that has been necessitated by the salary increase and new recruitment.
Goods and Services

45. The provision for Goods and Services, Madam Speaker, has also been revised upwards from the approved figure of K309.2 billion to K346.0 billion. This is on account of an increase in the unforeseen budget line of about K23.2 billion, of which K17.5 billion is towards Covid-19 pandemic management and treatment efforts and K4.5 billion is programed for re-administration of the Malawi School Certificate of Education Examinations. There has however, been a reduction in the normal ORT for most Votes reflecting the scaling down of both local and external travel as a result of the pandemic.
    Covid-19 Vaccine Program
46. Madam Speaker, as the Honourable Members are aware, His Excellency the State President Dr. Lazarus McCarthy Chakwera announced that the Government of Malawi has secured AstraZeneca Covid-19 Vaccine doses.
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47. The Honourable House may wish to note that Government secured these doses through the COVAX Facility for 20 percent of the population which is worth approximately US$40.0 million. The total requirement for this vaccine for the entire population is US$120.2 million. Government has further secured financing worth US$1.5 million and US$2.0 million from Sustainable Development Goals Acceleration Fund and the United States Government, respectively, for logistical and technical support.
48. Madam speaker, I wish to inform the August House that currently Government is in discussion with cooperating partners for more resources so that we secure doses for the entire population. Already, the World Bank has indicated that they are preparing a package of support not only for vaccines but for wholesale Covid-19 operation in Malawi.
    The Affordable Inputs Program
49. Madam Speaker, the provision for this program has
    been revised downwards from K160.2 billion to K142.0 billion as
    the number of beneficiaries in the database at the Ministry of
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Agriculture was revised down from 4.2 million farming families to 3.7 million.
Maize purchase

50. Madam Speaker, resources for maize purchase have been marginally increased from K10.0 billion to K10.4 billion, all of which was already spent during the first half. Going forward, I am pleased to inform this August House that in September 2020, Government assisted ADMARC to access a financing facility from the banks to the tune of K22.0 billion. This facility, Madam Speaker has not been fully utilised and will enable ADMARC to go early into the forthcoming agriculture marketing season. Furthermore, Madam Speaker, ADMARC will be allowed to use the proceeds from the sale of the previously purchased maize to continue purchasing new maize from this harvesting season. Additional resources for maize purchase will be provided in the 2021/2022 fiscal year.
    PROGRESS ON GOVERNMENT FISCAL REFORMS PROGRAMS Public Finance Management
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51. Madam Speaker, Honourable Members are invited to note that the review of the Public Finance Management Act, 2003 is in its final stages and the Bill will be submitted to Parliament during the 2021/2022 fiscal year budget session in June 2021.
    The New Integrated Financial Management Information System
    52.Madam Speaker, Government went live with the New IFMIS on 1st July, 2020 on a pilot basis with 4 key modules and 10 votes. Initially, there were some implementation challenges which were as a result of inadequate end user training and network problems. These have been rectified leading to stabilization of the system. Users are now able to process their transactions with minimum support. Going forward, Madam Speaker, Government will roll out New IFMIS to all MDAs.
    Implementation status of the Treasury Single Account (TSA)
    53.Madam Speaker, implementation of the new IFMIS has taken the TSA concept into consideration. The number of
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Government bank accounts has been reduced drastically for easy management and control.
Government Payroll and Pensions

54. Madam Speaker, following the deletion of Government pensioners who did not turn up for the head count exercise, Government has managed to save over K400.0 million from the pension payroll during the first half of 2020/2021 fiscal year. The same is expected to be realised during the second half as no major changes are anticipated to the deleted list. The saved amount is being used to clear the backlog of pension payments in order to reduce the waiting time.
    55.Madam Speaker, the August House is further informed that Government carried another head count for all public servants on Government payroll. Just like the Pension Payroll Audit, the Civil Service Personnel Audit is aimed at bringing efficiency in use of public resources by ensuring that only bonafide civil servants are paid by Government. Field work for the Personnel Audit has been completed and the
    23 team is now consolidating data. The preliminary report is expected by mid-March 2021.
    Affordable Inputs Program
    56.Madam Speaker, a few days ago, the Minister of Agriculture presented to this August House a report on the Affordable Inputs Program. It is very important, Madam Speaker to note that apart from ensuring food security, the AIP this year is expected to contribute significantly to this country’s economic growth.
55. Furthermore, Madam Speaker, this program has had other positive spill over effects on the society including job creation and economic empowerment. According to information from Smallholder Fertiliser Revolving Fund of Malawi, the number of people employed under the program increased substantially compared to years past. Small and Medium Enterprises in the transport and the real estate sectors were also empowered as they were very instrumental in the implementation of this program.
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Extended Credit Facility with the IMF

58. Madam Speaker, Honourable Members will recall that immediately after coming into Government, a decision was made to cancel the IMF’s Extended Credit Facility (ECF) program with Malawi. This was mainly due to a re-focus of policy objectives by Tonse Alliance Government. Furthermore, the IMF program that was inherited by the new Administration was almost off track and it would have required humongous effort to bring it back on track.
59. As a stop gap measure, Madam Speaker, the Tonse Alliance Government and the IMF agreed on a second Rapid Credit Facility (RCF) which disbursed US$102 million to Malawi in October 2020, of which US$30.0 million was a direct budget support to the Government. I am pleased to inform the August House that Treasury has already commenced discussions with the IMF that will lead to negotiations for a new program which is expected to align its objectives with that of Government and will anchor the 2021/2022 fiscal framework and budget.
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A.GENERAL POLICY ISSUES

60. Madam Speaker, I now wish to invite Honourable Members to note progress on a number of policy issues that Government embarked on aimed at supporting implementation of this Budget and other Tonse Alliance economic and development agenda.
    Rebranding Malawi Enterprise Development Fund (MEDF)
61. Madam Speaker, the Malawi Enterprise Development Fund (MEDF) was rebranded into the National Economic Empower Fund (NEEF) Limited in September, 2020. The main objective was to enhance its operational efficiency to economically empower Malawians through job creation; enhance entrepreneurial activities; and support agricultural productivity and value addition.
62. I am pleased, Madam Speaker to inform the August House that NEEF is now operational, notwithstanding the prevailing Covid 19 pandemic. NEEF is disbursing loans in accordance with its new policies and procedures. Total loan portfolio still stands at K40 billion and is expected to increase
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to K75 billion during the 2021/2022 financial year. The first phase involves disbursement of loans to groups of micro entrepreneurs.

63. As of the third week of February this year, 907 groups were mobilised comprising 634 women groups, 238 youth groups, and 35 mixed groups. Disbursement of loans in 2021 has a target of not less than 20,000 Malawians and as at 19th February 2021, NEEF had disbursed just over K1.0 billion to about 590 loan groups across the country. Phase two of loan disbursement will focus on individual small and medium enterprises and access is scheduled to roll out in early March 2021.
    Payment of Government Arrears
64. Madam Speaker, in order to support the business community during the Covid-19 pandemic period, Government has commenced payment of public sector arrears as one way of injecting the much needed liquidity into the economy. Under this program, Small and Medium Enterprises will be prioritised. Cash payments will be made on
    smaller amounts while promissory notes will be issued for large
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amounts. Payment is being made after thorough verification of the arrears by the Auditor General’s office.
Financial Inclusion and Entrepreneurship Scaling Project

65. Madam Speaker, Honourable Members may wish to recall that this August House authorised Government to borrow from the World Bank, funds amounting to US$86.0 million, or K63.6 billion for the Financial Inclusion and Entrepreneurship Scaling Project.
66. I wish to report Madam Speaker, that the project is now effective and the World Bank disbursed USD15.0 million. Government through the Reserve Bank of Malawi is working with local banks on modalities through which SMEs will access financing. Disbursement will commence mid-March 2021.
67. Madam Speaker, apart from contributing towards job and wealth creation, Honourable Members may wish to note that the project’s activities are structured in such a way that they aim at enhancing supply of financing liquidity and scaling up entrepreneurship skills in Malawi. Furthermore, Madam Speaker, this Project will assist Government in
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cushioning the private sector, especially in the SME sector, against the adverse effects of Covid-19 pandemic.
Creation of a Debt Retirement Fund

68. Madam Speaker, as I indicated during my Budget Statement presentation in this August House, one of the major concern in economic management of this country is the high and rising public debt stock. In order to start repaying this huge debt and reduce it to sustainable levels, Government is at an advanced stage in establishing the Debt Retirement Fund (DRF).
69. Madam Speaker, Ministry of Finance has completed the identification and quantification of the possible sources of finance into the Fund. Implementation of this Fund is expected to be approved by Cabinet in time for its operationalisation on 1st July 2021.
    Formalising the Informal Sector
70. Madam Speaker, Government made a commitment to empower informal sector entrepreneurs through
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cooperatives and associations to upgrade their skills and enable them produce quality products for the local and export market. In this regard, in December 2020 Government under the Public Procurement and Disposal of Public Assets Act enacted regulations to empower SMEs to participate in public procurement of goods, works, and services. However, Madam Speaker, these SMEs are required to register their businesses with the Registrar of Companies and the Malawi Revenue Authority for tax purposes.
Malawi Sovereign Credit Rating

71. Madam Speaker, a decision was made for Government to obtain a credit rating for Malawi as one way to facilitate the country’s access to international finance. Government will proceed to obtain a private point-in-time rating which will set the ground for a public sovereign credit rating. The process is however being delayed by COVID-19 travel restrictions.
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Long Term Development Bond

72. Madam Speaker, Government has progressed with preparations to issue a 15-year development bond for some strategic and flagship projects. My Ministry in conjunction with the Ministry of Economic Planning and Development completed the selection of prioritized flagship projects that will be financed through the issuance of this long term bond.
73. Madam Speaker, other financing models for these projects include Public-Private Partnerships, Foreign Direct Investment or local direct financing where Government will expect to receive a turnkey solution from a project promoter. Ministry of Finance will soon release a prospectus on all prioritized flagship projects, inviting the participation of the private sector in the national development agenda through infrastructure financing and development.
    Houses for Security Institutions
74. Madam Speaker, Government, through Ministry of
    Lands has commenced the construction of the promised
    10,000 houses for security institutions. In the first half of the
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2020/2021 fiscal year, K4.6 billion was released to Ministry of Lands to start construction of these houses. Currently 231 houses are under construction in different sites across the country. Honourable Members are invited to note that site selection as well as number of house allocation per site were decided upon after thorough consultations with the respective security institutions.

75. Financing for this project, Madam Speaker, is through a long term development bond that was issued by Government and raised the initial required amount of K21.0 billion. Just like many other Government projects this year, construction of security houses has many other positive spill over effects including job creation for the youth and economic empowerment for Malawian entrepreneurs in the construction sector as well as all other sectors with strong forward and backward economic links to this sector.
    Free electricity and water connection
76. Madam Speaker, the Tonse Alliance Government
    promised the people of Malawi free electricity and water
    connection. I am pleased to inform this August House that
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Government is working on a policy on free electricity and water connections. Implementation is expected to commence during the 2021/2022 fiscal year.

SUBMISSION

77. Madam Speaker, the August House is hereby invited to note the mid-year performance of the 2020/2021 Budget, as well as to consider and deliberate on the proposed Revised Budget estimates for the 2020/2021 financial year as presented in the Annexes II and III. The House is also requested to approve the changes in some votes.
78. Madam Speaker, I beg to move.
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