Mutharika adminstration should exercise fiscal discipline

Parliament will convene on September 1 to discuss the 2014/2015 national budget. I talk to Malawi Congress Party (MCP) spokesperson on finance Joseph Njobvuyalema on what the party expects in the budget.

Q : Parliament reconvenes for a national budget discussion on September 1, 2014. What does MCP expect?

A : In the first place, we are saying this is not a budget for MCP in the sense that it does not incorporate our manifesto or ideas of how we would like the government to run. Indeed, we know we are not in government, but our role will be looking at what policies the government has put in place and what development projects are there and of course, is the budget pro-poor? Are the village people benefiting from the budget? What about the conduciveness of the private sector in trading in the country. How is the revenue going to be generated? Are Malawians not being punished? These are some of the issues we are interested in and also we want to know what they are planning on Farm Input Subsidy Programme (Fisp), especially on how they are going to manage the programme and a few other things. But our key role here is to monitor the figures and demanding justification where necessary because if we want to bring in our own policies then the arrangement will change, because it means we are bringing in our manifestos and ideas as if we were running the government ourselves. We are yet to meet as party but we will soon hold a caucus so that we discuss these issues and see what we can push in the House for consideration by government.

Q: One of the issues that attracted debate during the budget consultation meetings was how government should finance the budget deficit. What is your position?

A: We don’t have [a position] and these are the things we will demand. This was the issue when they were coming up with the four-month financial resolutions for government and we demanded an explanation on how they were going to spend the K210 billion. Their explanation was that they are going to spend within last year’s budget. For instance, in health, they said they would do what was supposed to be done during the last budget. So, our thinking is that the arrangement will continue. So, the previous budget had about K640 billion and this means if we were maintaining the previous expenditure, the figures would not have reached what we have this year. We are interested to know, why is the budget shooting to K743 billion. The minister will have to justify this and the leader of opposition is actually geared to demand justification on this.

Q :What priority areas do you think should this budget consider?

A: According to MCP, our suggestion is that we should try and diversify the export base because in Malawi, our efforts to generate more revenue are poor. We are a zero-exporting country. So the thinking is that maybe this budget should provide a conducive environment where the private sector, including everybody else, are encouraged to be very productive and try to export some of the goods which we can make in the country. This is very important, and it is time we had the shift from tobacco to other sectors that can increase our exports.

Q: The budget presentation comes amid aid freeze by donors. How best do you think they should balance the budget while considering the economic challenges?

A: It is a very difficult situation because all the same we need to do all the things. We have to manage our ministries and departments and the country as a whole. But still we have to manage our government on our own. Now the best we can do is cut our coat according to size of our cloth.

If we bring in too many activities, we will not be able to fund them. So we should reduce ourselves to the size we can fund. We have to look at what we want to do in education, health etc. The way we are locating our resources we have to be more strategic. What do we want to do first and what might help, but if we bring in everything including those that were done when the donors were supporting us, the whole thing will be done in a wrong way.

Q: Government says it plans to broaden the tax base in order to cushion for donor aid freeze, amid fears by analysts who say increasing taxes may stifle consumption and private sector growth, leading to lower economic growth rate this year. Do you think it is possible for government to balance the two, economic growth and tax increase?

A: No, it’s not possible. Government cannot balance that. Actually, extending the tax regime is very punitive to Malawians. The first thing to do is to encourage the investors and create opportunities for Malawians and from there you can collect their tax. If you start with collecting tax from an income which is meagre, it will be very punitive. This is why we are saying we have to talk about this tax regime and it’s one of the priorities when we meet the minister before budget presentation. He has to look at these seriously. Malawians are one of the poor income generating people in the Sadc region and they have to be treated fairly

Q: Any last word?

A: Well, my advice is that we expect government to exercise a lot of fiscal discipline. We want country where issues of fraud are zero. They should deal with the issues of Cashgate conclusively and not only that and the budget which will be approved should be properly implemented. We know that we have an assurance committee in Parliament, they will be able to monitor and provide an oversight function. The Minister of Finance should be careful in the way he handles resources. Finally, make sure that activities put in the budget are implemented as approved.