Business Unpacked

Why Goodall is my man of the week

 

If I were to nominate a man of the week, Minister of Finance, Economic Planning and Development Goodall Gondwe would fit the bill for telling it like it is in as far as the economic situation is concerned.

Times are hard. Malawians are barely surviving. The national economy is on a stand-by generator, beyond the intensive care unit (ICU). The centre can no longer hold.

Instead of living in denial like many politicians would do, Gondwe this week boldly admitted things are not adding up. There is little revenue from the domestic scene to finance public expenditure at a time development partners are still holding on to their direct budget support purse.

Reality has sunk in. Economic growth has slowed down and Treasury has been prompted to eat a humble pie and revise downwards growth projections to 2.9 percent from the initial ambitious 5.1 percent, which had raised eyebrows given that the country was yet to recover from back-to-back years of poor food production owing to combined effects of drought and floods.

Several institutions, including the International Monetary Fund (IMF), the World Bank, the African Development Bank (AfDB), Economist Intelligence Unit, Economics Association of Malawi and Malawi Economic Justice Network, questioned the projected 5.1 percent economic growth rate in the circumstances.

Three months after Parliament authorised Treasury to spend about K1.2 trillion in the 2016/17 National Budget, good ‘ole Goodall says he plans to cut expenditure by 30 percent in a desperate bid to balance the budget.

Ironically, the public tax collector, Malawi Revenue Authority (MRA), the major source of domestic revenue, has in recent months been reporting improved revenue collection which has seen it beat its set monthly targets. Given the minister’s concerns on revenue and MRA’s purported “good performance” one wonders who is fooling who, especially with the background of doctored tax collection figures not so long ago.

Hitherto, Goodall and his colleagues in the Democratic Progressive Party (DPP) arrogantly and defiantly toyed with the idea that Malawi can do without donors.

Economic independence is the ideal way to go. But for a country such as Malawi there is still a long way to go. However, the transition should be gradual and planned; not forced, as has been the case on several occasions our leaders have talked about economic independence.

Malawi is a country whose recurrent budget is funded 40 percent by donors. On the development budget, we put in only about 13 percent, meaning that taxpayers in developed countries shoulder the burden of the 87 percent.

I liked Goodall’s admission rooted in pragmatism that Malawi “misses” direct budget support.

In the 2016/17 National Budget, Goodall had projected total revenue and grants at K965.2 billion, of which K190.4 billion would be grants from development partners. However, once again, he did not count on budgetary support in the current fiscal year.

Of course, there is a flicker of hope that the World Bank, the European Union (EU) and AfDB might pump in around K80 billion by March next year if government meets the conditionalities as outlined by the multilateral donors. The conditions remain visible progress in public finance management reforms, including incorporation of main government bank accounts in the Integrated Finance Management Information System (Ifmis), procurement of the Ifmis software itself, enforcement of the Public Finance Management Act and coordination of cash management, among other areas.

It takes a man to admit that things are not going according to plan. That done, what is critical is to set the standards in terms of employing best practices in economic and public finance management. Instead of playing to the camera by meeting conditions to impress donors, government should do things that will make Malawi a better economy and place to live in. n

 

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