Mejn faults revised budget

Malawi Economic Justice Network (Mejn), a network of civil society organisations (CSOs)working in economic governance, has said Minister of Finance, Economic Planning and Development Goodall Gondwe’s expenditure controls have come too little too late.

In the Mid-year Budget Review Statement delivered in Parliament last Friday, Gondwe unveiled several measures to reduce expenditure in the poorly performing 2015/16 National Budget which has since been revised downwards by K23 billion from K929 billion to K906 billion.

In an interview this week, Mejn executive director Dalitso Kubalasa observed that some of the proposals sound vague andtoo good to be true considering that similar pronouncements have been made in the past without yielding tangible results.

In his statement, Gondwe committed to reduce the public service wage bill, stop hiring new civil servants as well as drastically reducing Other Recurrent Transactions (ORT) expenditure which includes travel, fuel and vehicle entitlements.

The minister has also indicated that some development projects will be suspended where he plans to chop about K6 billion of the K23 billion to come from the 2015/16 National Budget and a K6 billion reduction in the wage bill from K228 billion to K222 billion.

But while Gondwe should be commended for adopting realism with the revised budget, Kubalasa argues that something could still be salvaged from it.

Said Kubalasa: “It is, therefore, far more important at every point in time to maintain one’s credibility as a leader by being relentlessly realistic rather than trying to gloss over problems.

“For the highlighted programmed budget review actions, although most of them still uncomfortably qualify as coming a shade too little and too late, we stillbelieve that something good can still be salvaged out of them between now and the end of the fiscal year.”

On the proposal to trim the public service, Mejn described it as vague and having a tight time line. In this regard, Mejn proposed that itshould be fast-tracked to be in line with the on-going Public Service Reforms.

Kubalasa said if the Office of the President and Cabinet (OPC) reviewed perks of senior civil servants, specifically travel, fuel and vehicle entitlements, waste and extravagance in the civil service could be controlled.

He said: “This [the review] could be the way to go towards cutting too much waste and extravagance, besides the aspect of truly walking the talk backed by public service policies and procedures guided by the spirit of an accountable leadership actually leading by example in austerity befitting the economic woes and poor civil service performance.

“This, however, largely still sounds easier said than done and somewhat too good to be true. We have heard similar actions before that have not amounted to much.”

Mejn also fears suspension of development projects threatens to affect some people and economic growth projections and expectations dependingon the rationale used to select such low impact projects.

Gondwe has promised to bring to the House a list of the development projects which will be suspended before members of Parliament (MPs) go into the Committee of Supply.

To further cut down the budget, the governmentalso plans to reduce interest on debt from K125 billion to K118 billion, of which interest on foreign debt will be revised from K24 billion to K10.7 billion; travel, goods and services from K186 billion to K183 billion and subventions to parastatals from K50.5 billion to K45.2 billion.

In its response to the 2015/16 revised budget, the Budget and Finance Committee of Parliament has demanded a list of civil service cadres who will be affected by the hire freeze.

Committee chairperson Rhino Chiphiko said the committee would reserve its support if the hire freeze extended to teachers, nurses and doctors who have suffered in the past two years.

On Monday, opposition Malawi Congress Party (MCP) and People’s Party (PP) responded to Gondwe’s proposed revised national budget and proposed solutions to the ailing economy.

Specifically, PP, the governing party between April 2012 and May 2014, described Gondwe’s proposed revision of the budget from K929 billion to K906 billion as a wrong reflection in real value in the wake of the rate at which the kwacha has depreciated against the dollar since the national budget was passed in July 2015.

MCP blamed the country’s worsening economic woes on poor management of the monetary policy by the Reserve Bank of Malawi (RBM).