Experts support austerity measures
Economic commentators say government should expect resistance when implementing austerity measures outlined in the 2022/23 National Budget, saying the measures are bound to take away luxuries from government officials.
In the K2.84 trillion National Budget presented in Parliament on Friday, Minister of Finance and Economic Affairs Sosten Gwengwe announced several strict austerity measures to save government resources.
The austerity measures were based on progress on various reforms government is undertaking to enhance the management of financial resources and improving public service delivery.
Gwengwe said expenditure control measures will include review of benefits and entitlements for senior government officials, including the presidency and Cabinet ministers.
Treasury is expected to review the government motor vehicles policy to reduce expenditure in terms of number, types and sizes of motor vehicles.
Further, government will also continue with the installation of pre-paid utility meters in all government institutions and also procuring security equipment and fertiliser directly from manufacturers.
Treasury also plans to recruit competent graduates in accounting to fix challenges faced in the processing of payment in Integrated Financial Management Information System, including fast- tracking the digitisation drive to reduce paperwork and fraud.
Reacting to the new austerity measures, taxation expert Emmanuel Kaluluma of EK Tax Consultants said while the budget has introduced austerity measures, government should brace itself for tough times to implement them as means taking away luxuries from senior government officials.
He said austerity measures are good for taxpayers as it will mean value for money and a shared economic pain.
Kaluluma said: “I foresee resistance from senior government officials like controlling officers, people who enjoy multiple benefits like hefty allowances and unaccounted for monthly fuel allocation among others.
“If, for instance, they will have their fuel allocation cut by half and given a less fuel consuming vehicle, there could be some procrastination.”
Malawi Confederation of Chambers of Commerce and Industry president James Chimwaza said the budget has been balanced where there are exemptions for both low-income earners and industries.
He said they have to go into details to better understand the measures, but largely there is a lot of positivity in the measures.
Gwengwe also said to strengthen financial oversight over State-owned enterprises (SoEs), a number of reforms are being implemented.
These include the formulation of guidelines for issuance of parastatal guarantees and letters of consent to enable borrowing by parastatals.
He also said all commercial SoEs will from 2022/23 fiscal year open holding accounts with the Reserve Bank of Malawi.
