Government sees no support in 2014/15 budget

The Malawi Government’s 2014/15 budget is being developed on the assumption of no government budget support, according an official from the Ministry of Finance.

“The 2014/15 budget framework assumes no government budget support and we feel there is need for continued public finance management systems for Development Partners (DPs) to return to using country systems [UCS],” said Betty Ngoma, assistant director, debt and aid division in the Ministry of Finance last week in Lilongwe when she presented a summary report titled ‘General Budget Support’ at the March 2014 review by the Common Approach to Budgetary Support (Cabs).

According to the fiscal plan, expenditure and net lending in the 2014/15 fiscal framework has been pegged at K693 million (US$1 702 702 702.7) out of which K181 billion (US$444 717 444.7) is development expenditure.

Such a figure is K52.7 billion (US$129 484 029.5) higher than the K640.3 billion (US$15 732 186 732.2) revised budget as of December, 2013.

But with revenue and grants projected at K617 billion, with an assumption of no government budget support (GBS), analysts have concluded that government has reverted to the Zero-Deficit Budget (ZDB).

Currently, Cabs is withholding budget support to Malawi worth $150 million (over K60 billion) since November 7 2013, angered by revelations of massive abuse of public funds at Capital Hill christened Cashgate.

But Ngoma said government had met two steps out of six as progress on the 2014/15 budget formulation.

Commenting on the performance of the budget in the first half, she said domestic revenue underperformed by K4 billion while grants underperformed by K24 billion.

“Expenditures over-performed by K45 billion while development expenditure under-performed by K27 billion,” she added.

A Lilongwe-based economist, who opted for anonymity, yesterday said it was apparent that government has reverted to the infamous zero-deficit budget which characterised the financial year 2011 and championed by the former president late Bingu wa Mutharika, following disagreements with Malawi’s major donors.

Under the ZDB, Mutharika envisaged the financing of the recurrent expenditure components of the budget using domestically generated resources.

Finance Minister Maxwell Mkwezalamba informed donors during the Cabs meet that government has already embarked on preparations for the 2014/15 budget.

“We, therefore, call upon the development partners to make their financial commitments for the 2014/15 budget and probably beyond in good time in line with our agreement in the Extraordinary Policy Assessment Framework (E-PAF) and principles of Paris, Accra and Bussan relating to predictability and effective development cooperation,” he said.