No hope in budget—Opposition

Various players have given mixed reactions to the 2013/14 National Budget, with leading opposition leaders describing it as “very creative” but “lacking hope” for Malawians.

Malawi’s Finance Minister Ken Lipenga on Friday presented a K638.2 billion (about $1.5bn) budget, which is 57 percent higher than the approved 2012/13 K406 billion (about $1bn) and 36 percent above the revised K469 billion (about $1.1bn) plan in nominal terms.

Amid shouts of support from government benches, Lipenga—clad in a navy blue suit—took to the podium in the almost half-empty chamber at around 14:05 hours to deliver his third national budget statement that lasted more than two hours.

From the first minute, the minister was in a world of his own, seemingly overconfident, interposing his speech with facial expressions and at times playing around with the tone of his voice to stress a point.

Leader of opposition and Malawi Congress Party (MCP) president John Tembo said: “It is creative, but this does not benefit Malawians much. For example, the removal of taxes on matches, ball point pens, how much does this contribute to the life of a villager? I would have loved if they did this on fertiliser. Otherwise, it is not touching on the life of a villager.”

DPP leader in Parliament George Chaponda said the budget is not offering hope to Malawians.

“The way the budget has been framed is worrying as it is not offering Malawians hope of reducing poverty. We are very doubtful as to how government intends to reduce inflation from around 30 percent currently to around 14 percent [by December]. It will take a miracle to do this.

“We are also surprised that nothing has been said about the forthcoming tripartite elections apart from the minister’s acknowledgment that the budget must, therefore, provide for this important event in our democratic process. This is a cause for concern as recently we have heard through the media that Malawi Electoral Commission is broke,” said Chaponda.

But a business captain—Press Corporation Limited (PCL) group chief executive officer Matthews Chikaonda—and some civil society organisations have hailed the budget as encouraging.

“The budget offers support to the Economic Recovery Plan. Apart from tax removals as well tax holidays imposed on other sectors, incentivised areas such as the construction industry, agriculture sector, electricity generation and distribution industry, mining and exploration, among others, offer hope and at the same time close existing gaps in the economy,” said Chikaonda.

Malawi Economic Justice Network (Mejn) executive director Dalitso Kubalasa described the budget as “very conscious with honest reflections about challenges Malawi is facing.”

He too praised tax breaks, including increasing tax-free thresholds under Pay As You Earn (Paye).

Malawi Health Equity Network (Mhen) executive director Martha Kwataine hailed government for allocating ‘substantive’ resources towards drugs.

“Malawi has for some time been battling drug shortages in hospitals. This is very commendable of government although the minister was not explicit in terms of the overall money allocated to the Ministry of Health. The idea of people paying for services at health centres where all the money realised will go to the clinics is also very welcome,” said Kwataine.

On their part, donors also hailed the fiscal plan.

“The government’s way of keeping sensible budgets is very important. In short, in this budget, the Malawi Government is keeping to fiscal discipline, which is a very important feature,” said British High Commissioner Michael Nevin.

United States Ambassador Janine Jackson said: “The budget is austere. But the general theme of improvement of incentives to the private sector is of the essence. This, coupled with the agro-investment strategy by government, spells growth for Malawi’s economy despite economic conditions being tough.”

In his statement, Lipenga said the key objective of the 2013/14 budget is to restore macro-economic balance and a market-based economy that will consolidate the economic reforms government embarked on in 2012.

“We have, however, prioritised some critical expenditure in areas of agriculture and food security, health, education, transport and water,” he said.