Pre-budget dialogue draws mixed views

There are mixed reactions  on the effectiveness of the annual pre-budget consultations by the Ministry of Finance with some stakeholders saying they are effective while others argue they are mere road shows as crucial views are not considered.

The reactions follow a statement issued yesterday by the Ministry of Finance indicating that Treasury will be receiving the 2021/22 pre-budget inputs from April 9 to April 30 2021.

Minister of Finance Felix Mlusu will thereafter engage in virtual meetings on the pre-budget consultations from April 20 to 23, according to the statement.

In an interview yesterday, Consumers Association of Malawi (Cama) executive director John Kapito, whose organisation is among the stakeholders involved in the process, said consumers find the pre-budget consultations ineffective as most of the proposals are not incorporated into the fiscal plan.

He said: “When you go out there and see what is coming out each year, you wonder if some of the proposals have been sidelined deliberately or whether the proposals were just unrealistic.”

Kapito said the 2021/22 financial year should focus on how to revamp the productive sectors of the economy such as manufacturing and tourism which have been the worst hit due to the Covid-19 pandemic.

On his part, Employers Consultative Association of Malawi executive director George Khaki observed that while some proposals are considered, to a larger extent, “most of them are not considered”.

“We need to look at how we build the economy back to normal by creating an enabling environment for businesses in the face of the Covid-19 pandemic,” he said.

In an interview yesterday, Betchani Tchereni, associate economics professor of economics at The Polytechnic—a constituent college of the University of Malawi, said the sessions cannot result in full consideration of all the suggestions over the years.

But he argued that the fiscal plan has responded to the wishes of people such as raising the tax-free threshold to K100 000 and increasing the minimum wage from K35 000 to K50 000.

Tax expert Emmanuel Kaluluma, who is also a member of the Institute of Chartered Accountants in Malawi tax committee, observed that the pre-budget consultations are effective except that on one hand, government wants revenue while on the other hand businesses want lower taxes which have to be met middle way.

In an interview yesterday, Ministry of Finance spokesperson Williams Banda defended pre-budget consultations, saying some proposals are not adopted as they need further research.

He urged the public to participate in the virtual meetings, saying “government wants the public to own the budget”.

This year’s budget is reeling under the effects of Covid-19 and a projected deficit of K810.7 billion.