The primary motivation for this Public Expenditures Review (PER) is to guide the government in implementing reforms needed to reestablish fiscal sustainability, create stable macroeconomic conditions, and make better use of scarce resources to foster more rapid and equitable growth and wealth creation, and improve the effectiveness and quality of service delivery. Six years have passed since the Government of Malawi carried out its last PER in Fiscal Year 2000/01 (July 1 to June 30), in collaboration with the World Bank. This report builds on the analysis of the earlier work, assessing progress made in implementing its recommendations and incorporating new recommendations in light of significant developments that have occurred subsequent to the 2001 report.