I was wondering how long government would continue managing the national budget without a national development strategy?
The last development blue-print, the second generation Malawi Growth and Development Strategy (MGDS II)—whose implementation period started from July 2011—expired in June 2016.
This means that the current budget (2016/17) was built and implemented without a living strategic document.
Right now, Finance, Economic Planning and Development Minister Goodall Gondwe is formulating the 2017/18 national budget for presentation in Parliament next month.
He will also most likely start the traditional budget consultations this month. Until Thursday, when Goodall announced, finally that the MGDS III is finally in place, I was asking myself what would be the strategic guidance for such consultations.
Surely, we cannot just rely on Treasury’s Economic Fiscal and Policy Statement to guide us! We need a medium to long-term policy document for the big picture outlook not one that is only limited to the next 12 months.
Without the medium term development strategy that is the MGDS, how would government review and align key priority areas to the budget? How would Capital Hill reassess sector strategic needs?
I know someone would argue that government could still base its budgeting on MGDS II by rolling it over.
But keen observers of Malawi’s development story may agree that the second MGDS was a disaster and it was during its implementation period that public finance management collapsed, the economy went downhill, social services became a tragic drama and both investors and development partners walked away.
Even official internal reviews by government, through the Department of Economic Planning and Development, show that MGDS II was mostly a waste of time. Even its design was flawed.
How can a strategic document have nine key priority areas for goodness sake? How do you effectively spread scarce resources this way? I am, therefore, glad that government appears to have drawn some lessons from the debacle that was MGDS II by reducing key priority areas to five.
We should have had MGDS III in place by now ready for implementation from July 1 2017 —starting with the next budget as the first operationalisation tool up to June 2022.
But for too long folks shuffled around their seats at Capital Hill yawning precious time away as nobody seemed to take leadership of the initiative.
Last year, there were some folks from the Department of Economic Planning and Development who went around consulting “key stakeholders, at various levels, with the aim of soliciting their views on the priorities the nation should focus on in the next five years, including the appropriate implementation modalities of the National Strategy.”
I attended one of those consultative meetings; that is why I wondered whether those folks were still on the consultation circus nearly one year after the expiry of MGDS II. I was ready to accept a one year gap between the last blue print and the new one, but more than that would simply have been indefensible.
Now that government appears to be ready with the MGDS III, it is crucial that key stakeholders in the budget process—tax payers, civil society organisations, development partners and even government ministries, departments and agencies (MDAs),ensure that the budget is aligned to this important document.
And by the way, where is the National Planning Commission? We need that body in place as soon as yesterday to avoid some of these planning lapses.
The other issue concerns pressure points that I believe should form part of the basis for the upcoming budget consultations and we need think-tanks such as the Economics Association of Malawi, the Malawi Economic Justice Network, the Economics Departments of our universities and even the Department of Economic Planning and Development to seriously agonise over these.
The first pressure point is the crazy growth in statutory expenditures—including the exploding public sector wage bill and its attendant unsustainable pensions and gratuities; public debt charges as well as compensations; refunds and arrears. These statutory expenditures are a ticking time bomb that will soon blow up right in our faces not too long from now if we do not control them now.
We also need a frank national conversation on the question of fiscal sustainability—especially how to ensure predictability of resource inflows and striking common sense balance for deficit financing and debt levels.
In this mix is coming up with a package of smart measures to ensure adherence to public finance management rules and Treasury instructions that appear to be ignored all the time.