Govt takes new approach to budgeting

From July 1 this year, government wil l plan its national expenditure plan, the budget, based on available resources and not projected expenditure as has been the case, it has been learnt.

Briefing stakeholders d u r i n g Pr e – B u d g e t Consultations in Blantyre yesterday, Minister of Fi n a n c e , E c o n o m i c Planning and Development Goodall Gondwe said Malawi needs to take this new path in as far as budget formulation is concerned because the previous budgets were premised on 30 percent or more donor funding.

But this time around, despite Malawi getting back on track of the International Monetary Fund (IMF) programme, the Enhanced Credict Facility (ECF), Gondwe said Malawi will have to formulate the 2016/17 National Budget without the support of traditional donors, such as, Britain, Germany, Norway and European Union (EU).

H e s a i d : “This, therefore, means [that] instead of formulating a budget on how much we will spend, the budget will be drafted around how much money we are going to raise and how much we can borrow from lenders such as the World Bank.

“This will require that we do not leave the system too open to avoid another Cashgate. We will have to do more for less. I also expect finance officers in all government agencies to exercise prudence by spending only on priorities.”

Justifying this change in the budget framework, Gondwe said the country is crying for transformation and this will only happen if government starts doing things differently.

Speaking in a telephone inter view yesterday, Chancellor College-based economics professor Ben Kaluwa welcomed the new approach, saying: “It government was listening to advice from economists. is good that long at last

“My only worry is that while government will plan around a zero-aid budget, unnecessary items such as the Malata and Cement Subsidy Programme will still appear in the upcoming budget. We do not need another subsidy programme when we are failing to sustain Fisp [Farm Input Subsidy Programme].”

However, Kaluwa said if implemented well social services cannot suffer as they will be among the priorities of priorities in the budget.

During the consultation meet ing, Economics Association of Malawi (Ecama) president Henry Kachaje said it is indeed high time government shifted from donor-based and weather-based budgeting to a more radical budget that incentivises Malawians.

To ensure that the new approach to budgeting does not affect public service delivery in crucial sectors such as health, education and security, Institute of Chartered Accountants in Malawi (Icam) proposed that government should co-ordinate with development partners to identify the activities which they are funding directly and take those activities off the budget.

Audrey Mwala, a member of Icam’s Taxation and Audit Committee, said government must also scale-up introduction of fiscal devices in value-added tax (VAT) collection and information from the devices used to catch into the tax net more taxpayers.