A few issues on the next budget

For how long will government continue managing the national budget without a national development strategy?

The last development blue-print, the second generation Malawi Growth and Development Strategy (MGDS II)—whose implementation period started from July 2011—expired in June 2016.

This means that the current budget (2016/17) was built and implemented without a living strategic document.

Right now, Finance, Economic Planning and Development Minister Goodall Gondwe is formulating the 2017/18 national budget for presentation in Parliament next month.

Malawi cannot just rely on Treasury’s Economic Fiscal and Policy Statement to guide us! We need a medium to long-term policy document for the big picture outlook not one that is only limited to the next 12 months.

Without the medium term development strategy that is the MGDS, how will government review and align key priority areas to the budget? How will Capital Hill reassess sector strategic needs?

I know someone would argue that government is still basing its budgeting on MGDS II by rolling it over.

But keen observers of Malawi’s development story will agree that the second MGDS was a disaster and it was during its implementation period that public finance management collapsed, the economy went downhill, social services became a tragic drama and  both investors and  development partners walked away.

Even official internal reviews by government, through the Department of Economic Planning and Development, show that MGDS II was mostly a waste of time. Even its design was flawed.

How can a strategic document have nine key priority areas for goodness sake? How do you effectively spread scarce resources this way?

By now, we should have had MGDS III in place ready for implementation from July 1 2017—starting with the next budget as the first operationalisation tool up to June 2022.

But no, folks are still shuffling around their seats at Capital Hill yawning precious time away as nobody seems to take leadership of the initiative. I mean, where is Gondwe in all this? Where is President Peter Mutharika on whose door step the buck ultimately stops?

Last year, there were some folks from the Department of Economic Planning and Development who went around consulting “key stakeholders, at various levels, with the aim of soliciting their views on the priorities the nation should focus on in the next five years, including the appropriate implementation modalities of the National Strategy.”

I attended one of those consultative meetings. Are those folks still on the consultation circus nearly one year after the expiry of MGDS II? I can accept a one year gap between the last blue print and the new one, but more than that is simply indefensible.

It is crucial that key stakeholders in the budget process—tax payers, civil society organisations, development partners and even government ministries, departments and agencies (MDAs) start pushing for a clear direction on this important document.

Otherwise this obsession with endless consultations will not help the country to move forward, certainly not at a pace fast enough to change Malawians’ living standards for the better.

And by the way, where is the National Planning Commission? We need that body in place as soon as yesterday to avoid some of these planning lapses.

The other issue concerns pressure points that I believe should form part of the basis for the upcoming budget consultations and we need think tanks such as the Economics Association of Malawi, the Malawi Economic Justice Network, the Economics Departments of our universities and even the Department of Economic Planning and Development to seriously agonise over these.

The first pressure point is this crazy growth in statutory expenditures—including the exploding public sector wage bill and its attendant unsustainable pensions and gratuities; public debt charges as well as ccompensations; refunds and arrears. These statutory expenditures are a ticking time bomb that will soon blow up right in our faces not too long from now if we do not control them now.

We also need a frank national conversation on the question of fiscal sustainability—especially how to ensure predictability of resource inflows and striking common sense balance for deficit financing and debt levels.

In this mix is coming up with a package of smart measures to ensure adherence to public finance management rules and Treasury instructions that appear to be ignored all the time.