2015 Budget: Malawi leader says he’s fulfilling promises

… Donors still pessimistic assistance
…Goodall hints at continuation of zero-aid budget

President Peter Mutharika has told Malawians that he is fulfilling promises he made when he entered government in May last year by introducing public sector reforms and strengthening public finance management to avoid a recurrence of cashgate.
In his state of the nation address on opening of the 2015/16 budget meeting at Parliament earlier today, Mutharika said much as old habits die hard and change could be painful, reform initiatives such as a lean cabinet, reduction of presidential powers and other measures to reduce public expenditure needed support of everyone.
In his 90 minute speech which he read out word for word unlike last year when he asked Malawians to read the rest on the internet, Mutharika expressed hope that the conclusion of the fifth and sixth reviews of the Extended Credit Facility of the International Monetary Fund (IMF) would trigger disbursements from other development partners.

So far, only African Development Bank has made a commitment to support the 2015/16 budget, the rest of donors have adopted a ‘wait and see’ approach to the government’s public finance management initiatives.

However, Mutharika’s pessimism that donors would come back resounded in his call for public and business operators to support the government’s tax policy reforms
“Government has also taken steps to strengthen debt management practices and restructure payment of outstanding arrears and will avoid further accumulation of arrears through strict expenditure control measures,” Mutharika said.
The growing budget deficit has also concerned Mutharika as he committed to reducing the deficit to levels below three percent of the Gross Domestic Product to reduce pressure on domestic borrowing and interest rates.
On insecurity, Mutharika did not directly comment on the growing insecurity of business and ordinary Malawians but announced that the number of Police officers would increase by 1 874 following the passing out parade of new recruits next week.
“In the 2015/16 financial year, the government plans to procure an additional 100 Police vehicles and build capacity in crime investigation through acquisition of appropriate equipment, training, recruitment of criminal intelligence gatherers,” he said.
Under the new Cement and Malata Subsidy Programme introduced by the DPP government, the government plans to construct 15 440 houses across the country.

Leaders of political parties are expected to start responding to the address tomorrow, Wednesday.
Meanwhile, Mutharika’s outline of public sector and public finance management reform policies are yet to convince a section of the development partners who assist the government.
United Nations and an envoy of the government of the United States of America told The Nation that it was encouraging for the president to clearly outline the reform programmes in a bid to regain trust of development partners and ordinary Malawians.
The government has been operating without budgetary support for the past two years since revelations of plunder of public resources amounting to K24 billion shocked donors and Malawians alike.
So far, only African Development Bank plans to provide the government with about K8 billion in budgetary support with a further outlook from the World Bank in the next financial year.
“The public sector reform agenda is a welcome development as there has been a lack of trust in the public financial system. But hopefully as the agenda reform is implemented, trust in that system will be restored,” UN coordinator in Malawi Mia Seppo said.
Her US counterpart Virginia Palmer said much as she was pleased that Mutharika placed emphasis on public sector reform and public finance management, implementation and results achieved would be just as important.
“The US government does not fund the budget in Malawi so our projects have not been interrupted because our funds are channeled through other means. But we will continue to work closely with the government on issues which are very close to my heart, public sector and public finance management reforms,” Palmer said.
Other development partners such as Britain and European Union would not immediately react to Mutharika‘s address until they had fully digested it.
Finance Minister Goodall Gondwe is expected to present his budget statement on Friday, May 22 and he has estimated that it will be a “hard to sell” budget amounting to K900 billion (about $2.1 billion).

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Read Pres Mutharika’s full speech here: State of the Nation Address