Malawi’s development partners have welcomed the 2015/16 National Budget with cautioned optimism, describing it as a “tightrope” Finance Minister Goodall Gondwe and the rest in government have to walk.
With his briefcase in hand, Gondwe arrived at Parliament Building in Lilongwe to the traditional flashes of cameras at exactly 2pm and proceeded to present the K901.6 billion budget to a jam-packed chamber.
Gondwe conceded during the presentation that the days of donor reliance for traditional budget support appear to be over, citing worldwide trends in donor fatigue which, he said, were worsened locally by Cashgate.
World Bank country representative Laura Kullenburg described the budget as “pragmatic but with little room for manoeuvre.”
She said much as the budget outlined ambition for Malawi to wean off its dependence on donors, hard work and fiscal discipline will be key in a “very tight environment.”
“The emphasis on budget execution and expenditure is very important and there is very little room for manoeuvre. It’s important for government to avoid extra borrowing given the debt service ratio and GDP is quite high now. It’s a very tight situation.”
She added: “I think it’s a very pragmatic budget looking at the donor environment and the changing landscape. There is need for proper management of the resources and more coordination with donors. There is also a need for a serious review of the Farm Input Subsidy Programme [Fisp].”
She said Malawi also needs an independent and credible commission to review the strategic implementation of Fisp and welcomed the proposal by Gondwe to review its funding and implementation.
“As for economic independence, commitment to fiscal prudence will be crucial. It’s very much work in progress, it cannot happen overnight,” said Kullenburg.
International Monetary Fund (IMF) country director Geoffrey Ostricher described the budget as a tightrope which government should tread carefully while implementing.
“We will have to examine the budget in greater detail, the complete picture was not provided in numbers but that will be provided very soon.
“From what we have heard, however, the budget seems to strike a relatively good balance between the level of available resources and the need for macroeconomic stability which involves containing the level of domestic borrowing while at the same time provide enough of expenditure to provide development needs.
“Generally, it appears very good but we need to examine it very closely,” said Ostricher.
EU head of delegation Marchel Gerrmann and British High Commissioner Michael Nevin also welcomed the budget’s steps to move towards independence but called for prudence in implementation.
Head of Britain’s Department of International Development (DfID) Jane Marshall said the budget demonstrated commitment to key social services.
“We will wait to see, the budget is full of good intentions,” said Marshall.
In his presentation, Gondwe reported that the budget will, once again, be predominantly supported by local resources with the exception of the returning African Development Bank (AfDB). But Gondwe hinted on the possibility of more donors — particularly the EU and the World Bank — returning later in the financial year.