The Budget and Finance Committee of Parliament has described the 2020/21 national budget presented by Finance Minister, Joseph Mwanamvekha, on Friday as reckless.
Chairperson of the committee, Sosten Gwengwe, was speaking on the sidelines of a budget analysis meeting organised by the Malawi Economic Justice Network (Mejn) on Wednesday night with financial support from IM Swedish.
Gwengwe said a good budget is supposed to look at the revenue and expenditure side and that if there are differences, they must not be huge.
He said looking at this year’s budget, statutory expenditures such as salaries, pensions, gratuities, public debt interest and subventions as well as foreign amortization, they are close to a K1 trillion yet revenue is also projected at K1.3 trillion.
“We have a budget that is aiming to collect K1.3 trillion and spend all of it on statutory expenditures, leaving no room for improving people’s lives. No room for fertilisers, fuel and everything else.
“They are relying on a huge deficit of over K650 billion and you see that on paper, it looks like a budget but in reality, this budget is a non-starter and leaves a lot to be desired,” Gwengwe said.
He noted that if government intends to borrow K650 billion, the private sector would not have any space to borrow.
“If you have a private sector which has no access to credit, then you are killing the whole economy and that’s why we are saying this budget is reckless,” Gwengwe said.
Mwanamvekha on Friday presented a K2.023 trillion budget in which revenues and grants are estimated at K1.372 trillion, representing 19.2 percent of GDP and which is 10.1 percent down when compared to the 2019/2020 mid-year revised estimate.
Domestic revenues are estimated at K1.215 trillion of which tax revenues are estimated at K1.152 trillion, representing 16.1 percent of GDP while other revenues have been estimated at K63.2 billion.
Mwanamvekha further observed that out of the K2.023 trillion total expenditure, recurrent expenses are estimated at K1.506 trillion while development expenditure is programed at K517.7 billion.
A budget analysis presented during the interface with lawmakers indicated that the great budget deficit in the financial plan is likely going to impact negatively on the domestic money market.
The analysis revealed that private sector access to capital will be under a serious threat.
“Provisions to flagship projects remain pathetically low at 21 percent, a situation that threatens future sustainability of the country’s production potentials. There is unbalanced spread of resources among the investment portfolios with projects in Transport and ICT sector prioritised over those in the Health and Agriculture sectors.
“Alignment of performance indicators in the Malawi Growth and Development Strategy (MGDS III) and the national budget still remains problematic with some key indicators not being reported in the budget books thereby compromising their implementation,” reads part of the analysis.
Mejn Programmes Associate, Richard Chiputula, said the budget analysis session was aimed at dissecting the budget so as to empower the lawmakers with the finer details of the financial plan to enable them make informed contributions when analyzing the budget in the August House.
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