Govt cautioned on budget performance
Against government claims that expenditures have been on track, with figures showing a good tax revenue performance, an analyst has cautioned parliamentarians not to be taken away by aggregates, but critically review the 2014/15 budget.
In the wake of the Mid-Year Budget Review, which started yesterday at Parliament in Lilongwe, Malawi Economic Justice Network (Mejn) said their analysis at district level shows that councils have not been receiving all their budgeted monthly requirements, especially on development budget.
Against this year’s zero aid budget, which included a donor aid freeze, a wide fiscal deficit, mounting domestic debt, arrears, high inflation and prohibitive interest rates, government has said performance is on track.
While Treasury spokesperson Nations Msowoya asked for more time on Monday to comment on expenditure and debt, figures provided by Malawi Revenue Authority (MRA) show that between July and December 2014, government collected about K229 billion.
This is less than one percent over the period’s projections while during the same period last fiscal year, MRA collected about K186 billion, 20 percent above target.
Mejn executive director Dalitso Kubalasa told Business News yesterday stakeholders should not be taken away by aggregates, but focus on salient issues, including service provision.
“We have talked to some councils and the message that we have got, so far, is that their monthly ceilings are way below what they would have.
“Specifically on the development budget, including medical drugs, the councils have not been getting their budgeted estimates,” he said, warning that this may be the same for other sectors, including agriculture and education.
Kubalasa said the budget belongs to everyone and needs everybody’s critical eye, but added that against all the challenges that the current fiscal plan has been through, government has been brave.
On the economic front, the performance has been mixed with dismal performance on others while the country has achieved some feat on others.
The 2014/15 budget assumed an average inflation of 15 percent by June 2015, a gross domestic product (GDP) growth rate of 6.1 percent and expected interest rates to fall sharply.
But due to food and non-food items, inflation rate has been increasing, hitting 24.2 percent in December 2014 while analysts expect the rates to rise further.
Along with rising inflation, interest rates remain prohibitive, forcing the Reserve Bank of Malawi (RBM) to raise the policy rate to 25 percent in October last year, consequently pushing up prime rates to about 39 percent.
Due to external factors, including the recent floods, which washed away crops, including maize, tobacco, rice, groundnuts and cotton, Malawi is expected to miss its 2015 growth forecast of 5.8 percent this year.
Finance Minister Goodall Gondwe last week said government will be forced to revise downward GDP growth rate.
But not all was lost in the first half, as the kwacha, which lost substantial ground three months after closure of the tobacco sales, has since December last year, been appreciating due to prudent monetary policies while cumulative import cover [gross official and private sector reserves] has risen to over five months.
