Salvaging the national budget

That Malawi’s 2015/16 National Budget is off-track and requires a critical and honest review is not in dispute.

In fact, even the International Monetary Fund (IMF) last October advised the Malawi Government to revise the budget downwards in line with economic realities on the ground.

Simply put, the economy is in a mess.

The kwacha, our beloved and vulnerable currency, is on a free-fall, depreciating at the fastest rate ever and traded at K764 to the dollar at the time of writing this article on Tuesday this week. In July 2015, when the 2015/16 National Budget came into effect, the kwacha was trading at K451 to the dollar.

Inflation rate is at 23.5 percent compared to 22.3 percent in July 2015. High inflation—the rate at which prices of goods and services change over a period of time—is eroding people’s buying power, worsening poverty.

Interest rates are high, with commercial banks pegging them at over 35 percent. This is depressing consumption and has slowed down business activities and the economy in general.

Further, the budget deficit is widening, public tax collector Malawi Revenue Authority (MRA) is collecting less than targeted taxes—a further indication of the hard times facing businesses and individuals.

Honestly, given the economic situation and people’s expectations, Minister of Finance, Economic Planning and Development Goodall Gondwe is not in an enviable position.

Gondwe and his budget team face the challenge of trimming the K900 billion budget.

This week, The Nation quoted an inside source at Treasury as having confided that the minister, among others, plans to announce ruthless cuts to the Farm Input Subsidy Programme (Fisp) allocation and the travel budget, including that for the President during the Mid-Year Budget Review Meeting of Parliament that started on Monday.

If implemented, the proposed cuts sound a good starting point for a budget review. Travel—both local and international—is one major expense in the budget for civil servants, public officers and the President.

For example, when travelling locally, the President’s motorcade has at least 20 vehicles, most of them with big V6 or V8 engines guzzling fuel at speeds of over 120 kilometres (km) per hour between Blantyre and Lilongwe. On Friday evening, a friend told me he was among motorists asked to pave the way for the President along the M1 Road between Blantyre and Lilongwe. To pass time in the middle of nowhere, he said he decided to count the vehicles and stopped at 22.

I am not in any way suggesting that the President should catch a public minibus as he did in Lilongwe during the campaign trail. However, a review of the composition of his motorcade, over time, can make huge savings. Besides, during the 2014 election campaign, the President promised not to preside over “small” functions such as installation of chiefs. However, the 22-plus motorcade last Friday burnt fuel, drivers’ allowances and deployment of police officers along the 310 km stretch between Lilongwe and Blantyre to witness elevation of Senior Chief Ngolongoliwa in Thyolo, the following day.

Another area I feel Gondwe and his team as well as members of Parliament (MPs) in general can explore is the suspension of the implementation of the Decent and Affordable Housing Subsidy Programme widely known as Cement and Malata Subsidy. This is a subsidy allocated K7 billion to build houses for the poor in the country’s 193 constituencies.

Much as decent housing is important, in the circumstances, the K7 billion or whatever remains of it could be used to better use. For the record, this subsidy does not add any value to the national economy.

There are several areas requiring cuts to salvage the national budget. It is a tall order, but it is not impossible.

Goodluck Goodall and your budget team. n