Budget deviations to be endorsed in retrospect

Ministry of Finance has said Parliament will endorse budget expenditure deviations in retrospect in the absence of a mid-term review, but an analyst has condemned the move as irregular.

Figures for the first half (July to December) of the 2013/14 budget indicate serious deviations from the projected revenues and expenditures, raising the need to revise the budget.

But Ministry of Finance spokesperson Nations Msowoya said in an interview last week the budget management mechanism is in place.

“Parliament will endorse the revenues and expenditures in retrospect during the next budget sitting,” he said, noting that the power to call Parliament does not rest with the Ministry of Finance.

Parliament was legally dissolved on March 20, after expiry of its five-year lifespan.

But analysts have condemned the move, arguing the mid-term review is important.

Centre for Social Concern (CfSC) economic governance programme officer Mathias Kafunda, in an e-mail response to questions last Thursday, said in the absence of the budget review, Malawians will not know if the implementation of the 2013/14 budget has been effective.

“This means that counter-measures might not have been developed where financial and policy slip ups have been identified. It also means that inappropriate approaches might have been used to verify actual expenditure against planned expenditures which certainly compromise the performance of the budget in the remaining period as assessment of difficulties,” he said.

An official at the Ministry of Finance who sought anonymity said that the mid-term budget review is an important function due to the volatility of the kwacha and inflation.

He also noted that the review was important in view of the suspended budget support that has greatly decreased disbursed grants, arguing that expenditures and revenues have changed since the passing of the budget which required revisiting with the blessing of Parliament.

According to first and second quarterly budget performance reports, domestic revenues over- performed by over K15.8 billion from a targeted K187.7 billion while grants heavily underperformed by K45.9 billion from a budgeted K78.8 billion.

In the first six months, government overspent on the recurrent budget by about K17.7 billion from a projected K237 billion while the development expenditure line underperformed by K43 billion from a projected K81.3 billion.

The budget showed that total revues—domestic and grants—were projected at K603.4 billion while domestic revenues were projected at K363.1 billion and donor grants at K240.3 billion.

Total expenditures were pegged at K638.2 billion, comprising K463.1 billion recurrent expenditure and K175.0 billion development expenditure.

In the previous two mid-term budget reviews, government heavily revised initial budgets due to factors that included pressures on some budget lines.