Budget test lies in implementation

Minister of Finance, Economic Planning and Development Joseph Mwanamvekha had all the reason to smile and walk tall on Thursday, October 10 2019 as members of Parliament (MPs) had, as it were, ‘rubberstamped’ his maiden national budget.

Following the passing of the Appropriation Act, Treasury can now raise and spend money up to June 30 2020. Initially, the 2019/20 National Budget was proposed at K1 730 987 000 000, but was slightly adjusted upwards by K6.2 billion to K1 737 203 889 804.

In raising the budget allocations, the minister said “we did not take money from any vote, we just added more”.

Well and good. But then I have been there before and I have come to realise that having Parliament pass the Appropriation Act to authorise spending is one thing and indeed implementing the same to the letter is a different ball game altogether.

This is one of the reasons I am not excited as the country’s national budgets have, over the years, become nothing but a wish-list that is not used to achieve the desired goals and objectives. One just has to take a look at the national budgets for the past five or so years, which have ended up being dismantled during the Mid-Year Budget Review.

During Mid-Year Budget Review, it is normal to make adjustments, either downwards or upwards. However, it is immoral when the trend becomes the norm and, at the end of the day, public service delivery suffers due to massive cuts in allocations. This tends to confirm the fears that the budget is nothing, but flowery.

My point is that implementation is critical because that is what will ensure the trickle-down effect of the allocated resources. Where adjustments, mostly downwards are effected, they should be realistic. The cuts should not leave the budget as a bare bone with no meat to facilitate effective public service delivery.

Key to the successful implementation of the budget is resources. With most development partners no longer providing direct budgetary support since revelations of Cashgate—the plunder of public resources at Capital Hill exposed in September 2013—the struggle has been real. Domestic revenue has not been satisfactory as most taxpayers have not been generating the same revenue to adequately feed the resource envelope through taxes.

This year’s budget is not short of political rhetoric, notably the construction of stadia for two privately-owned football teams. That in itself threatens to frustrate effective implementation of the real priorities to take this country forward.

Not so much different from previous financial plans, the 2019/20 National Budget is an ambitious expenditure plan which is mostly  banking on domestic tax collections from Malawi Revenue Authority (MRA) and non-tax revenue.

Public debt is high. The challenges that subdued the performance of industry, such as erratic power supply, remain largely unresolved. This is where the problems start. Whereas borrowing in itself is not bad, as long as it is for worthwhile investments, the same poses a threat to the private sector which is touted as the engine of economic growth through increased cost of borrowing.

Through national budgets, governments outline their expenditure plans and how they plan to raise revenue in a given financial year. Thus, funding is critical to achieving proposed objectives in a budget. When all is said and done, lest we forget that the budget is not money. It is a plan; hence, the devil lies in the detail.

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