The Parliamentary Budget and Finance Committee has described the revised 2017/18 Budget as a mere wish list that does not reflect the country’s economy characterised by reduced revenue collection and poor performance of grants.
Government has revised the budget by K9.3 billion, bringing it down to K1.313 trillion from K1.323 trillion, with revisions expected to the recurrent budget, especially on travel.
The committee’s chairperson Rhino Chiphiko yesterday observed in the House that the mid-year budget statement and its accompanying documents contained overly confident growth forecasts when the same Minister of Finance, Economic Planning and Development Goodall Gondwe admitted that power shortages had negatively affected revenue collection.
According to the budget documents, blackouts resulted in reductions in individual and corporate income and profits as well as purchases of value added taxable goods due to reduced purchasing power of Malawians.
According to the mid-year report, VAT underperformed by K7.3 billion, import duty by K6.7 billion, pay as you earn (Paye) by K14. 6 billion, withholding tax and excise duty by K6.1 billion and K4.1 billion respectively.
But Chiphiko said the poor state of the economy saw a number of companies laying off staff.
“Under performance of Paye signifies that a lot of employees were laid off by private companies as a result of under production and retrenchment has obviously increased the number of unemployed people in this country,” Chiphiko said.
He also observed that if Other Recurrent Transactions expenditure would increase from K660 billion to K687 billion, then the plans to introduce expenditure cuts would not materialise.
Among the planned expenditure cuts were hire freeze in public service, reduction of fuel allowances, stopping payment for motor vehicle maintenance as well as limiting business class travel.
“It is incumbent upon the Ministry of Finance to find line items in the budget that are not significant enough to warrant funding, for example, there is need for the government to overhaul the whole fleet service,” Chiphiko said.
He also described the projections as ambitious, considering that project grants performed badly, including K55 billion that was expected from the European Union (EU) but did not materialise.
Chiphiko wondered why Gondwe factored into the budget the amount when discussions had not yet been finalised.
“This makes a mockery of the whole budget which basically translates into a wish list,” he said.
Apart from EU pledge not coming through, the budget at mid-year has also suffered the non-disbursement of K12.9 billion under Agriculture SWAP, Education SWAP as well as PFEM Pool Trust Fund and National Aids Commission grants.
“My committee would like to call upon the minister to explain why there was under-performance of dedicated grants projected at K24.4 billion and we only got K11.4 billion at mid-year,” said Chiphiko.
Gondwe is banking on a K60 billion budgetary support from the World Bank to rescue the 2017/18 Budget from disaster following a K45 billion bailout to Agriculture Development and Marketing Corporation (Admarc) and a K46 billion shortfall in revenue collection.
No governmental official had responded to Chiphiko’s observations, but Malawi Confederation of Chambers of Commerce and Industry (MCCCI) chief executive officer Chancellor Kaferapanjira also dampened the enthusiasm of the rebounding economy that Gondwe portrayed when he told our sister paper Weekend Nation that he was disappointed with government’s over expenditure.
“In general, I really don’t think the finance minister has been accountable enough,” Kaferapanajira is quoted as saying. n