Government spending ‘illegally’

Malawi Government is “illegally” spending taxpayers’ money by implementing the revised budget framework without seeking Parliament approval, Weekend Nation has learnt.

Minister of Finance Dr. Maxwell Mkwezalamba said last Friday government proceeded to implement the revised budget framework based on Cabinet approval, a decision the Budget and Finance Committee of Parliament has described as irregular and illegal.

“In terms of how we are doing, after the 7th November Cabs [Common Approach to Budget Support] review meeting and following the decision to delay disbursement of budget support, we did proceed to revise the budget framework which was approved by Cabinet, I believe on 26th of November.

“The revised budget framework, as approved, is the one that we are implementing. In terms of how we are faring, I would say we have fared very well in the sense that we have implemented the revised budget framework as approved by Cabinet,” said Mkwezalamba.

The cashgate, through which billions of public funds have been looted from the Capital Hill, prompted government to revise the 2013/14 national budget framework following demands from donors and IMF.

But it is unclear when Parliament would meet for mid-term budget review which was initially expected to take place in January to, among others, approve the revised budget framework for implementation.

In the revised budget framework, overall government expenditure was increased by K4.5 billion from the initially approved estimate of K635.8 billion to K640.3 billion largely due to inclusion of interest payments on loans.

In some areas, revision of the budget also led to cuts amounting to K32 billion in funding to government ministries and departments.

Said Mkwezalamba: “This revised budget framework took into account the resources that we were going to expect, taking out the donor inflows that we were expecting in the second quarter as well as third quarter. We also had to look at expenditure control measures [and] revenue enhancements.

“The IMF board meeting is taking place based on the assessment that has been made by the IMF staff. If we had not fared well, the board meeting would not take place. I would say we have done very well in making sure that we implement the revised budget framework.”

However, Budget and Finance Committee of Parliament chairperson Francis Kasaila on Thursday described the implementation of the revised budget framework as illegal, saying his committee is saddened that government has proceeded in that manner.

“That is illegal. If there is a revised budget framework, that framework is supposed to be approved by Parliament. It is only Parliament that can approve revision of some cost centres in the budget.

“If they are implementing the revised budget framework, the Ministry of Finance has to explain what is happening to Parliament when we meet during the mid-term review because by law, they were supposed to come to Parliament other than doing something different,” said Kasaila.

He said his committee requested that Parliament should meet early January to approve the revised budget, but said the Finance Ministry has not responded.

“What we know is that there was a request from IMF that we have to revise our budget immediately after the cashgate. They did the revision of the budget and sent it to IMF. They did not bother to send the same framework to Parliament for endorsement. That is not normal.

“We just heard the framework was discussed with IMF. Probably, before discussing the framework with IMF, government should have discussed that framework with Parliament.

“If government has revised its budget, it must go to Parliament for approval. If you have already started implementing the framework, that’s irregular. It’s not within the law,” said Kasaila.

He said lack of Parliament scrutiny and approval of the revised budget framework is dangerous as it may lead to payment of avoidable compensations to contractors whose contracts are altered without careful consideration.

“We asked the Secretary to Treasury during our last meeting to provide us with information on what they were going to reduce. Then there was an indication that government was going to reduce expenditure on some of the projects.

“What we need to know is that all projects in which government is engaged have a time frame. Anytime you revise implementation of the projects, it has cost implications. When you stop a project after already engaging the contractor, you have to pay costs for demobilisation and re-mobilisation to the contractor. The contractor also charges for idle time. All these things are provided for in the contracts.

“As Parliament, we needed to look at the projects which were going to be affected by the revision and the cost implications on the contracts which government signed. The Secretary to Treasury has not come back to us on that,” said Kasaila.

He said they requested government to ensure the mid-term budget review is done early January, saying it is now unclear when the meeting would take place.

“What we have also learnt is that government never consulted its departments and other ministries on their budget provisions when revising the budget framework to find out what their priorities are. We thought they would not have started with going to IMF and implementing the budget before doing that,” said Kasaila.

In an interview on Thursday, Chancellor College law associate professor Edge Kanyongolo also said Parliament is the only institution with powers to approve government expenditure.

“I would side with the chairperson of the Budget and Finance Committee, public funds can only be spent with the authority of Parliament,” said Kanyongolo.

He, however, said the implementation of the revised budget framework before getting Parliament nod can be corrected through the process of ratification; adding Parliament has no powers to punish the Executive for spending before getting approvals.

“Parliament can ratify those expenditures subsequently, but it is ideal to seek approvals before expenditure. Parliament does not have punitive powers. All it can do is to summon relevant authorities using its committees to quiz them on why they have done certain things,” said Kanyongolo.

In an interview on Thursday, Leader of the House Henry Phoya said he would not comment on implementation of the revised budget framework. He also said Parliament has procedures to allow ratification of any government expenditure made outside the initially approved budget framework.

“There is a procedure that you can use to bring to the attention of Parliament certain expenditures that were not part of the first expenditure,” said Phoya, adding he had no information about when Parliament would meet for mid-term budget review.

When asked on the illegality of government implementing the revised budget framework before getting Parliament approval, Attorney General Antony Kamanga yesterday said: “That is a matter of the Minister of

Finance. Ideally, what we are talking about is the Appropriation Bill which is passed in Parliament with provisions on government expenditure, that the amount should not exceed a certain threshold.

“If there is revision of the budget in the course of implementation, there shouldn’t be any problem if the expenditure is within the amount provided in the approved appropriation. I suspect that that [revision] should be the case because of the current problems.

“I don’t have the details, but there can be a supplementary Appropriation Bill in Parliament to provide for expenditure which is not part of the initial appropriation,” said Kamanga.

Speaker Henry Chimunthu Banda on Thursday said the process of determining when Parliament would meet is not yet completed.

“As it is now, the consultation process has not been concluded and therefore I cannot give any appropriate information,” said Chimunthu Banda.