State Residences is among the winners of the revised budget as its recurrent budget is projected to increase by K150 million ($198 939), but at the expense of a K435 million ($576 923) cut in its locally funded development budget.
Malawi Defence Force (MDF), Malawi Police Service (MPS) and Ministry of Foreign Affairs and International Cooperation will enjoy increases in billions of kwacha despite Treasury trimming the 2015/16 National Budget by K23.7 billion ($31.5 million).
In communication circulated to members of Parliament (MPs) meeting in Lilongwe for the Mid-year Budget Review, Minister of Finance, Economic Planning and Development Goodall Gondwe has announced budget cuts which, among others, will see a freeze in the hiring of teachers and nurses in the next six months.
However, the soldiers, police officers and several ministries will afford smiles.
A close scrutiny of the revised budget indicates that the cuts will be felt the most in Personal Emoluments once the projected wage bill is decreased from K228 billion ($302.4 million) to K222 billion ($294.5 million) following the hire freeze.
Gondwe’s budget proposes that Other Recurrent Transactions (ORT) be reduced by K4 billion ($5.4 million) while the development budget, with local resources, will suffer a K6 billion ($8 million) decrease.
Further, the revised projections indicate that Ministry of Foreign Affairs and International Cooperation headed by George Chaponda will have a K2 billion ($3 million) increase in Personal Emoluments apart from a K400 million ($530 504) rise in ORT. Initially, Personal Emoluments for the ministry stood at K7.3 billion ($9.7 million) and will now be K9.3 billion ($12.4 million).
In his Mid-year Budget Review Statement delivered in Parliament in Lilongwe on Friday where he announced the trimming of the national budget from K929 billion to K906 billion, Gondwe said MDF and MPS had spent within their limits by December 31 2015.
However, the Mid-year Budget indicates that come June 30 2016, the end of the government financial year, MDF will get an extra K1.3 billion ($2 million) as additional salaries and wages.
The police’s ORT, on the other hand, will increase by K1.4 billion. This could be attributed to the purchase of operation vehicles yet to be procured.
“There has been no significant over-expenditures to speak of. The five votes that gave problems last year, including the police and the Malawi Defence Force in fact also spent within their limits. The Treasury has strengthened its oversight function over these votes intensively,” Gondwe said in his statement.
The minister did not make it a secret that Treasury would withhold funding for hiring new civil servants, intensifying fears in the health and education sectors where hiring was suspended then resumed after an outcry from various sectors.
The losers of the Mid-term Budget Review include the locally funded development budget under the Ministry of Health, which Gondwe has reduced by K3.9 billion while the donor-funded projects are expected to increase by K1.5 billion.
The Judiciary, which had an approved budget of K5.6 billion, is another loser as its ORT budget has been reduced by K500 million.
In the last financial year, the Judiciary heavily lobbied for an increase in the budget after it was observed that courts did not have money even for stationery or fuel for magistrates and judges.
Ironically, while Foreign Affairs, police and MDF are enjoying the increases, constitutional bodies such as the Law Commission and the Anti-Corruption Bureau (ACB) will suffer cuts in ORT and a hire freeze.
Gondwe has also made huge cuts in local councils allocations as he will only disburse K4 billion out of the K6 billion approved for road construction in cities and he will cut K2 billion which was allocated to locally funded projects in councils.
To allay fears that the hire freeze would adversely affect important sectors, Gondwe said there would be proposals to reduce the size of the civil service.
He explained that ORT would be reduced following a review of travel, vehicle and fuel entitlements in the civil service.
The minister also played down complaints of underfunding in ministries and departments, noting that the government ministries, departments and agencies (MDAs) were comparing monthly funding with their original requirements submitted to the Treasury prior to Parliament’s approval of vote allocations. He said Treasury allocated funds according to the approved budget.
Said Gondwe: “In some cases, the reason has been that certain ministries have reprioritised functions according to the wishes of managers. We found that ministries tend to prioritise expenditure on travel at the expense of other important items such as fuel for ambulances in hospitals, in the case of Ministry of Health.”
In its response to the 2015/16 revised budget, the Budget and Finance Committee of Parliament has demanded a list of civil service cadres which 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 which 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).