Government called to balance priorities
Stakeholders to the second leg of the Ministry of Finance and Economic Affairs Pre-Budget Consultation Meetings yesterday dared government to balance priorities to sustain economic targets.
During the meeting chaired by Minister of Finance and Economic Affairs Simplex Chithyola Banda, the stakeholders expressed different views on the budget including urging the government against implementing the constituency re-demarcation due to economic challenges.
Malawi Electoral Commission (MEC) completed the re-dermacation of 193 constituencies and created 35 new ones.
In his presentation, Lilongwe University of Agriculture and Natural Resources (Luanar) associate professor of economics Kennedy Machira said it was contradictory that government is implementing a recovery budget while stretching the resource envelope by increasing the number of constituencies.
He said government should delay the implementation of the new constituencies until the country resurrects from the economic challenges.
Said Machira: “We need to look at this issue of additional constituencies critically because it is a huge investment which would see MRA [Malawi Revenue Authority] running around to finance this initiative.”
When asked in an interview if the suggestions are not coming too late, he argued that a messenger is never late, thus it is up to government to review its priorities within priorities and whether it is a feasible and honest decision to be implemented now.
Machira said implementing the new constituencies will mean taxpayers paying K45 billion for Constituency Development Fund (CDF) alone.
Chithyola Banda said MEC and Ministry of Local Government, Unity and Culture were better placed to comment.
But MEC spokesperson Sangwani Mwafulira said people should appraise themselves with the law and refrain from creating public confusion when commenting on the matter.
He said: “You cannot use a factor that is not part of the criteria to reverse or suspend a process that followed all the tenets as provided in the law.”
Making the Economics Association of Malawi (Ecama) presentation, economist Lucius Pawa called for theneed for authorities to respond to emerging issues by weighing the economic side while improving the security side.
Citing the export ban on scrap metal effected some months ago, he said it will likely drive people out of business and reduce government revenue and foreign exchange earnings.
Pawa also pointed that the issuance of sugar import licence counters import substitution efforts.
He said: “There is a need for thorough analysis of the potential impact of new policies before implementation.”
Ecama also cautioned government to manage expectations of the $175 million Extended Credit Facility (ECF) from the International Monetary Fund (IMF), arguing that it is limited and insignificant to the country’s needs.
He said dealing with protracted foreign exchange shortages requires a focus on trade and not aid.
In his address, the minister said government anticipates a gradual economic recovery with a growth of 3.2 percent in 2024 on account of the improvements in the availability of foreign exchange and investments made in the agriculture sector.
He also stated that government is focusing on diversifying the economy through carbon markets trading, diaspora engagement and Golden Visa Programme as well as quantifying the country’s natural minerals for investment.
Said Chithyola Banda: “However, we anticipate inflation to slowly decline in 2024 with the end period and annual average inflation rates projected at 17.4 percent and 27.1 percent respectively.”
Other suggestions by Luanar included the need for government to continue improving on the targeting and implementation of the Affordable Inputs Programme (AIP) while targeting productive smallholders.
Disability rights advocate Vincent Ranjero asked government to recruit sign language interpreters especially at the courts as the blind and deaf are grappling to access justice.
During the first leg of the consultations in Blantyre on Monday, Chithyola Banda said the 2024/25 fiscal plan will focus on recovery and cushioning the economy from the effects of policy changes government has implemented.
The minister said implementation of the Malawi 2063 and its First 10 Year Implementation Plan (MIP-1) required government to make tough choices today to ensure that the imbalances in the economy are addressed.
The ECF arrangement aims to support the authorities’ commitment to restore macroeconomic stability, build a foundation for inclusive and sustainable growth, including to strengthen resilience to climate-related shocks and address weaknesses in governance and institutions.
