Govt transfers K10.4bn to LAs in six months
Malawi Government transferred K10.4 billion (about $26m) to the Local Authorities (LAs) between July and December 2012, representing 56 percent of the approved K26 billion (about $65m) in the 2012/13 budget.
According to the National Local Government Finance Committee (NLGFC), the budget is primarily financed by Central Government transfers at a provision of K18 billion (about $45m), locally generated revenue at a provision of K7.4 billion (about $8.5m) and donor financing at K600 million (about 41.5m).
NLGFC is an institution provided for under the provisions of the country’s Constitution placed to drive the fiscal decentralisation processes, and its job is, therefore, to ensure that LAs have the financial resources to execute their functions and that the resources are well managed.
The organisation also collects the budgets of all councils and supervises their accounts.
It said the sum transferred under the general resource fund, which is an unconditional grant to the LAs, was K548 million (about $1.3m) representing 48 percent of the approved budget.
“Sector transfers, which are conditional grants that relate to the specific devolved functions under respective sectors, were at K9 billion [about $22.5m] and represented 55 percent of the approved budget.
“The constituency development fund (CDF) transfer was at K931 million (about $2.3m), representing 69 percent of the approved budget while the city road network infrastructure development fund transfer was at K274 million (about $685 000) representing 72 percent of the approved budget,” reads a write-up from NLGFC.
The projected cash flow funding requirement for July to December 2012 as submitted by the LAs to the Ministry of Finance through the NLGFC was K10.9 billion (about $27.2m).
But NLGFC says the actual funding of K10.4 billion over the period, therefore, represented 95 percent of the LA forecast funding requirement for the period.
“Relative to the approved budget and the submitted cash flow funding requirement, the Central Government fiscal transfers to the Local Authorities over the six months period were favourable,” says the NLGFC.
The Central Government fiscal transfers are made up of sector funds for the devolved functions, the general resource fund, the city road network infrastructure development fund and the CDF.
Locally generated revenue comprises income from property rates, fees and licences, service charges as well as income from commercial undertakings, according to NLGFC.
The organisation says the 2012-13 LA locally generated revenue budget is at K7 billion (about $17.5m), and the main sources of locally generated revenue include property rates, market fees, fees and service charges, licences and permits and collections from commercial undertakings.
In total, the LAs collected K2 billion (about $5m) between July and December translating into 29 percent of the budget.
Malawi’s Finance Minister Ken Lipenga, in the mid-year budget review said the 2012/13 budget is on track, stressing that government has contained expenditures within the budgetary ceiling, while targets for revenue and debt repayment are on track.
“The successful implementation of the first half of the Budget is an important achievement against the difficulties we continue to experience,” he said in the statement.
Lipenga said while government is pleased with the mid-year budget performance, there is no room for complacency, urging strong commitment to the economic reform programme.
