Parliament on Thursday authorised Treasury to spend K1.7 trillion in the 2019/20 financial year to the delight of Minister of Finance, Economic Planning and Development Joseph Mwanamvekha who saw his maiden national budget passed.
But the Budget and Finance Committee of Parliament and some economists have asked government to ensure that the financial plan is implemented as authorised by the National Assembly.
The budget, whose nominal value is K1.7 trillion, is equivalent to 27.6 percent of the gross domestic product (GDP). Initially, the budget was proposed at K1 730 987 000 000 but members of Parliament passed the Appropriation Bill that pegged it at K1 737 203 889 804, an increase of K6 216 889 804.
The financial plan passed at exactly 11.48am is an increase of 20.1 percent from the 2018/19 National Budget of K1.4 trillion.
Speaking after the budget was approved, Mwanamvekha said he felt relieved. He said he was not sure that the legislators would approve his budget.
Said the minister: “This was my first budget, so I was not sure how it was going to be received, but we thank God it has passed the way I presented it.”
Mwanamvekha said the two institutions—the Office of the Ombudsman and the Malawi Prisons Service—had their allocations increased following calls from legislators who observed they were underfunded.
Mwanamvekha said no vote faced a chop as a result of extra allocations: “I did not take money from any vote. We just added more money.”
Initially, Malawi Prisons was allocated K10 118 247 316 but got K10 148 247 316 in the approved budget. The subvented organisations vote 275, under which the Office of the Ombudsman falls, had estimates pegged at K111 737 110 479 and the approved bears the same amount despite the indicated rise in the Ombudsman’s allocation.
Another change in the budget is the withdrawal of one percent withholding tax on mobile money transactions proposed in the 2019/20 National Budget following pressure from a number of stakeholders.
In his winding up statement on the budget debate in Parliament on Tuesday, the minister, apparently succumbing to a recent public outcry over the proposed tax, said instead, government will introduce a 20 percent withholding tax on interest earned by Trust Funds and commission to mobile network operators (MNOs).
While welcoming the budget, Budget and Finance Committee of Parliament chairperson Sosten Gwengwe advised the minister to implement the measures as promised in the financial plan.
He said: “It is very flowery. It might face some challenges. As Budget and Finance Committee, we do welcome the budget, but the key issue is the implementation.”
On his part, economist Dalitso Kubalasa expressed his worry over the budget, saying it is hard to believe that government will fulfil the over ambitious budget.
“I’m not too sure what to expect, especially with the saying ‘once bitten, twice shy’. The optimist in me wants to be positive, believing that government will do the needful and ensuring it walks the walk by actualising all the politically correct rhetoric that has been made hoping that there is still time to do the right thing in tandem with the real priorities and necessities that stand to propel Malawi forward,” he said.
Kubalasa said he is yet to be convinced if government will be doing business unusual, “especially when I see the irony in the approvals for things such as the private stadia when real potentially impactful priority flagship projects are languishing with no meaningful funding”.
While welcoming the budget, Malawi Economic Justice Network (Mhen) executive director Grace Kumchulesi said the budget is not responsive to the needs of Malawians, which is disappointing.
She said: “The theme of the budget is inclusive growth, yet it is leaving millions behind.”
In the Budget Statement, Mwanamvekha increased the tax-free band by K10 000 from K35 000 to K45 000 to cushion low-income earners from rising cost of living by freeing some more disposable income.
The budget has also increased the minimum wage from K25 012 per month to K35 000.