Minister of Finance, Economic Planning and Development Goodall Gondwe’s search for means to recover the under pressure 2017/18 National Budget could see travel policy reforms extended to a large number of public servants.
In an interview yesterday, Secretary to the Treasury (ST) Ben Botolo confirmed that there were such proposals which would be presented to various stakeholders, among them Parliament, for approval.
He said: “It is true there is pressure on the budget and to lessen that pressure and ensure we finalise some of the programmes, it is important that we implement some expenditure cuts. Some of the measures will stay for a while but others will be eased off as the situation improves.”
Botolo said the anticipated poor revenue performance in the ranges of K15 billion to K20 billion, poor economic performance due to persistent power shortages plus planned maize purchases had necessitated the proposed cuts.
He said: “We cannot go on spending as if the economy is performing well.”
However, Botolo said the travel policy would not extend to the President who already did not have a presidential jet and had on several occasions travelled on commercial flights.
On the likely implications of the proposals not being adopted, Botolo said the budget would continue to be squeezed and certain programmes and projects would be affected.
In an interview earlier this week, the minister told The Nation the budget faces pressure from under-collection of domestic revenue as well as mitigating food insecurity by purchasing maize on time to avoid maize imports.
In 2016, Parliament adopted a motion moved by Nkhotakota South East member of Parliament (MP) Everson Makowa Mwale which proposed that government officials such as principal secretaries and presidential advisers should no longer be travelling business class.
In the MP’s estimation, the government could save about K5 billion every financial year if the proposal was implemented.
But the government has refused to let go of the revenue draining Malata and Cement Subsidy programme, which in the 2017/18 budget was allocated K7 billion but could be increased to K10 billion if Parliament approves the proposals.
The measures are “to compensate for the increased expenditures on maize purchases, wages and salaries and iron sheets subsidy.”
A copy of proposed expenditure cuts circulated to heads of ministries and departments which The Nation has sourced sees travel expenditure being reduced by 10 percent through implementation of the measures.
According to the memo, the government sees domestic borrowing limit being increased from the current K27.8 billion to K47.1 billion owing to poor performance of grants and domestic revenue collection.
Apart from missed domestic revenue targets, a K55 billion budget support that Treasury expected from European Union is likely not to materialise and Gondwe is dealing with a K45 billion loan repayment to commercial banks on behalf of Admarc which he had also not anticipated.
The twin disasters of dry spell and fall armyworms which have struck 18 districts and could result in the loss of 273 000 metric tonnes of maize is another added pressure to the 2017/18 budget which Treasury has to avert through early purchases of maize.
Reacting to the proposed measures, Economics Association of Malawi (Ecama) executive director Maleka Thula, in an interview, hailed the move given the prevailing economic conditions that were not foreseen at the beginning of the fiscal year.
However, Gilbert Kachamba, dean of social sciences at Catholic University, said the move may to some extent affect the country’s economic projects, adding “I hope essential services will not be affected with the cuts in expenditure”.
But social and political commentator Humphrey Mvula downplayed the proposals, saying the adjustments are likely to fulfil political aspirations, adding the travel cut could have been extended further.
He said: “Six months from now, this government will be faced with a huge elections budget, where will they get enough money? What will they do? I know they are struggling to raise enough revenues.”
In 2013 government also suspended both internal and external travels for its officers, including former president Joyce Banda, following a decision by major donors to suspend Malawi’s budgetary support.
The donors under the Common Approach to Budgetary Support (Cabs) cut their aid for the first quarter of the 2014/15 fiscal year following disappointment over the looting of billions of public funds at Capital Hill famously known as Cashgate.