Fisp budget up 54%

The Budget for the Farm Input Subsidy Programme (Fisp) has jumped by at least 54 percent.

Blaming the sharp increase on the depreciating kwacha and donors’ decision not to help finance it, Finance, Economic Planning and Development Minister Goodall Gondwe said in his Mid Year Budget Review Statement in Parliament in Lilongwe yesterday that government will spend K22.6 billion more on the programme.

“It will also be recalled that donors declined to contribute to the seed subsidy of (maize and leguminous seeds) whose total cost is estimated at K9 billion. In view of the importance of seeds in the Fisp programme, it was decided that the government should assume these costs and that the farmers themselves would contribute a sum of K1.5 billion leaving K7.5 billion to be assumed by the government,” he said.

Gondwe said the total increase in cost of Fisp, including seeds, is K22.6 billion, forcing government to borrow to fill the gap.

Gondwe said without these escalated costs, the domestic borrowing would have amounted to zero, but in view of the escalated costs of fertilisers and the seed subsidy under Fisp, total borrowing is estimated at just under K23 billion, which he said is below the targeted domestic borrowing as at the end of the financial year on 30th June 2016.

The IMF target under the Extended Credit Facility (ECF) programme is K25 billion, he said.

“All in all, the performance of the budget this year has been better than before except for the projected expenditure on Fisp. As the house is aware the bulk of expenditure on Fisp relates to the imports of fertilisers and in view of the deep depreciation of the currency, the cost of procuring fertilisers has escalated.

“However, this year, instead of shouldering all the escalated costs, the suppliers of fertilisers have had to shoulder some of the costs and the Government as shown in table 2 has accepted only K14.9 billion of the total escalated costs of approximately K30 billion,” explained the Minister. n