Various stakeholders and experts have questioned the 2020/21 K2 trillion National Budget, saying it is unrealistic and falling short of responding to critical needs of people amid the current novel coronavirus (Covid-19) pandemic economic downturn.
Presenting the K2.023 trillion budget in Parliament on Friday, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha said recurrent expenses are estimated at K1.5 trillion, representing 74.4 percent of the total expenditure.
The minister has pegged development expenditure at K517.7 billion which is an increase from a 2019/2020 mid-year revised figure of K470.7 billion.
But reacting to the budget, Malawi Congress of Trade Unions (MCTU) general secretary Dennis Kalekeni said in an interview that workers are disappointed that Treasury has failed to take hid of their demands as submitted during the minister’s pre-budget consultation.
In the budget, for instance, Mwanamvekha announced that workers will enjoy K50 000 tax-free band on monthly income, which Kalekeni said is a far cry to their demand that tax-free band be raised to K100 000 to increase the current plummeting buying power of workers.
The budget has maintained minimum wage at K35 000 and has not offered salary increment to civil servants, contrary to expectations of the public service workers.
But Kalekeni said it would be unreasonable for workers to demand salary increase amid the current Covid-19 pandemic, but government needed to offer relief to them by waiving value-added tax (VAT) on basic needs and household utilities.
Said Kalekeni: “The minister needed to ensure that take-home salaries for workers are cushioned despite having no increments. One of the ways is to increase workers’ disposable income by increasing the tax-free threshold to K100 000.
Centre for Social Concern (CfSC) programme officer for economic governance Bernard Mphepo faulted the minister for awarding relief benefits to the already rich in society such as Cabinet ministers and members of Parliament at the expense of the poor.
He said: “Our position is that the tax-free band and minimum wage needed to be raised to K100 000 because our studies in the Basic Needs Basket show that this amount is reasonable to cater for the food poverty line.
He said awarding benefits to rich people is increasing inequality between the rich and the poor, adding that rich people such as the President, Cabinet ministers and members of Parliament needed to be paying more taxes while the poor needed such tax reliefs to survive.
Chairperson of the Budget and Finance Committee of Parliament Sosten Gwengwe described the budget as unrealistic, saying the minister needed to learn from failures of the 2019/20 budget and come up with a realistic financial plan that can transform and recover the economy.
He said the budget has already rich people to merely please them when the budget, in the minister’s own admission, has a huge deficit that needs financing.given out a lot of freebies to the
“The budget will largely cater for salaries and debt repayment at the expense of development. We cannot afford a lavish budget because we are a poor country amid so many challenges that need attention”.
He questioned why the Minister has allocated K29 billion in the 2020/21 national budget for fresh presidential elections when actually the current 2019/20 budget has the same amount which was allocated in February during the mid-year budget review.
Economics lecturer at the Polytechnic, a constituent college of the University of Malawi Betchani Tchereni expressed concern that the development budget is only at 25 percent while the recurrent budget has about 75 percent.
But Mwanamvekha backed his budget saying it seeks to speed up economic recovery, facilitate infrastructure development and economic empowerment for the vast majority of the people, including the youth, women and the physically challenged.