Finance and Economic Affairs Minister Simplex Chithyola Banda yesterday showed that government had listened to stakeholders’ concerns about weak allocations to crucial sectors in the face of donor aid cuts by giving more to pro-poor and other neglected areas.
The top-up, estimated at a combined K52.2 billion, would help to improve implementation of government programmes and projects—ultimately enhancing service delivery in health, education and agriculture, according to Chithyola Banda.
But with total spending rising by K20 billion from K8.05 trillion proposed on February 28 to K8.07 trillion that Parliament approved yesterday, the minister’s winding up speech did not name the sectors he had sacrificed to make the extra allocations possible.
He also did not explain any new revenue lines that would cover the additional resources.
Of the K52.2 billion, K23.4 billion or 45 percent of the extra funds have gone to the Ministry of Health, which is the biggest loser of the United States’ (US) cancellation of aid contracts.
In the proposed 2025/26 National Budget, government proposed to allocate K741.05 billion to the health sector, up from K729.47 billion in the previous financial year.
The additional health allocation has slightly boosted the sector’s allocation of total expenditure from 9.2 percent to nearly 9.5 percent, but still below the 15 percent financing level the Abuja Declaration requires on health.
Chithyola Banda said the additional funds to health will support HIV and Aids services, recruitment of frontline healthcare workers, operationalisation of the Malawi National Cancer Centre and new dialysis services at Mzuzu Central Hospital.
Said the minister: “We have ensured that all the affected critical services are provided for in the budget to ensure continued service delivery.”
Last week, chairperson of the Parliamentary Committee on Health Mathews Ngwale and prominent health rights activists pleaded with government to increase funding to health to narrow the gap left by fleeing donors.
Meanwhile, the National Assembly has the second biggest addition at K11.7 billion which, according to a senior Treasury official with intricate knowledge of the budget, is largely catering for members of Parliament’s gratuities as they exit their term after the September 16 General Election this year.
The top-up to the Legislature will also cater for new parliamentary constituencies following the redermacation that saw the number jump by 36 from 193 in 2019 to 229 this year, said the source.
The other additional allocations are K5.8 billion for infrastructure compensation and Millennium Challenge Account projects; K4.9 billion to the National Local Government Finance Committee for blood and blood product supplies; K2 billion for the Malawi University of Science and Technology to establish a laptop and tablet assembly plant to help expand digital learning.
A further K2 billion will enhance public sector capacity, while K1 billion is earmarked for the Aquaculture Mega Farms Project to strengthen food security.
Treasury has also committed K798 million to the National Arts and Heritage Council and the Peace and Unity Commission while K500 million will go to the Climate Change Fund to bolster environmental resilience.
Both Chithyola Banda and Treasury Secretary Betchani Tchereni were not immediately available to answer The Nation’s question of where the additional money will come from for the top-up allocations.
But our Treasury source said the fiscus did not factor in the proposed budget revenue from regularisation of kabaza operators, who are registering for tax compliance and other road fees payments that have already started flowing in.
He added that government is also banking on ongoing fiscal consolidation within the public finance system to free up some resources and the aggressive implementation of the Domestic Resource Mobilisation Strategy that focuses on broadening the tax base; improving tax compliance and the perception of tax system; strengthening Malawi Revenue Authority’s institutional capacity for revenue mobilisation and improving non-tax revenue collection to bring additional revenue within the coming fiscal year.
