‘This is a feasible budget’

National budget consultation meetings began last Thursday and Minister of Finance, Economic Planning and Development Goodal Gondwe has presented the budget plan which has increased by almost 16 percent from the last budget. In this interview, ALBERT SHARRA talks to Chancellor College professor of economics Ben Kaluwa on what this budget means to Malawi and other issues.

Q: The minister has indicated a budget estimate of K743 billion. Is this budget feasible?

A: It is expected every time that the budget should increase and what the minister has presented is the size of the budget as of now. Two years ago, it was about K600 billion and the increase is in line with the country’s economy because our economy has grown and our problems have grown as well. So, I can say yes, this is a feasible budget.

Q: Is this the type of budget you expected?

A: Yes, it is about what we have been expecting, but there is still more expectation especially on support from the development partners. We would love if the development partners would come in, not necessarily through the budgetary process, but through sector interventions. If a development partner comes in to support, let us say education, this will still create an assumption that the country enjoys international development support. So I say this is what we expected. The expectation is there that we need support from development partners and the support will produce sound impact if it comes straight to specific sectors of the economy.

Q: Some donors who pulled out their support to Malawi such as Cabs are yet to resume aid. What measures do you think government should adopt in case they do not resume the funding anytime soon?

A: This is a wake-up call for Malawi. If we cannot achieve some of the things that we need to achieve now, we have to be prepared to be able to achieve the same things in the near future.

Q: Government says it will finance the deficit through foreign debt as well as more domestic borrowing. What is your position on this?

A: It is just like the last resort given the fact that we are in trouble with regard to foreign reserves. We are in trouble and we really need to come up with better ways of financing our budget so that we are able to finance the deficit. It is going to be a nuisance of a problem for government to resort to external borrowing because it is not healthy for the country as of now. Of course, we will get through with the borrowed money, but we are creating future problems because we are expanding our foreign debt which we continue to struggle to pay back.

It is a dangerous approach to rely on borrowing because we are not supposed to be in a position of being so definite about our capacity to service any kind of foreign debt from now.

Q: Some people have argued that government should do away with subsidies and in this budget, government has two subsidies for farm inputs and building materials. What is your reaction?

A: It is not about some people, even me, the day I was in a meeting with the Minister of Finance, Economic Planning and Development, I told him about the dangers of cooking up more new subsidies when we are having problems with other major subsidies. So, we are saying in some cases people are able and willing to spend on the same services which government wants to subsidise. It is not only this government, even the previous ones have been patronising people in terms of forcing services on them even when the people are willing and able to pay for them. Services such as education and health, so we are saying government is imposing on its people services when the people are able and willing to pay for them. We should not be thinking of new subsidies as of now.

Q: If government is going to cut allocations to some ministries, which areas do you think can be considered to lose or reduce their allocations?

A: This is in line with the above. We are talking of subsidies when we are cutting down some of the allocations to other services that government is supposed to provide. We can do away with the subsidies, for example, the building materials subsidies because it is government cooking up these subsidies.