Malawi’s Finance Minister Ken Lipenga—fending off attacks on high travel spending and other decisions in the 2013/14 budget—has attributed the doubled internal travel budget to classification errors.
In his statement to wind up the K638.2 billion (about $1.5bn) 2013/14 budget debate in Parliament on Friday, Lipenga said the errors, plus the one-off elections expenditure, have skewed the travel budget to an incorrect amount of K33 billion (about $83m) that his ministry will soon rectify.
According to a summary of recurrent and capital estimates at item level contained in the draft 2013/14 financial statement, the internal travel budget has increased from the approved K15.795 billion (about $40m) in the 2012/13 fiscal year to K32.894 billion (about $82m) in 2013/14.
This represents a 108 percent increase that prompted the Malawi Economic Justice Network (Mejn) and the Catholic Commission for Justice and Peace (CCJP) to argue that the People’s Party (PP) administration wants to use the resources for partisan politics in the May 2014 tripartite elections.
Other Malawian civil society organisations (CSOs) such as Centre for the Development of People (Cedep) and Centre for Human Rights and Rehabilitation (CHRR) have demanded that Lipenga should cut money from the travel budget—which even Treasury concedes is one of the biggest sources of wasteful spending—and redirect the funds to the health sector that has been under-funded this year.
Classification errors
In his wind-up speech in Lilongwe, Lipenga cited three factors that led to the K33 billion figure as representing the cost of internal travel in the next budget.
First, he said, was the elections budget that he said will require those involved in elections activities to travel. Lipenga could not state how much is planned as the elections’ travel budget.
The 2013/14 budget has set aside around K18 billion (about $45m) for the Malawi Electoral Commission (MEC) for the management of the May 2014 tripartite elections, just K1 billion (about $2.5m) less than the K17 billion (about $42.5m) that has been added to the nearly K16 billion (about $40m) travel budget approved in 2012/13.
Second, the minister said the internal travel budget line has increased on account of an amount which has been “erroneously classified” as internal travel under National Aids Commission (NAC) grants. He did not mention the amount.
“These grants are given to CBOs affiliated to NAC, which are involved with community-based activities,” he said.
Third, according to Lipenga, the internal travel estimate has also risen due to another “misclassification” of agriculture Sector Wide approach (SWAp) expenditures from the World Bank. Again, Lipenga did not mention the ‘misclassified’ figure.
“These misclassifications will be rectified as the approved budget documents will be produced, otherwise, for all other votes, internal travel has either been maintained at the same level of 2012/13 fiscal year or slightly increased,” he explained.
‘Lame explanation’
In an interview on Saturday, CCJP national secretary Chris Chisoni dismissed Lipenga’s explanation, describing it as “lame”.
Chisoni urged Parliament to scrutinise the travel budget line, saying the incumbent Joyce Banda administration has shown an insatiable appetite for internal and external travel and might be trying to mask it.
“He is trying to find a political reason for it. The technocrats that formulate a budget cannot just wake up and put in lines like that without being checked and why has it taken all this time for the error to be explained?” queried Chisoni.
Defending his overall budget, Lipenga restated that the economy is healing, pointing to major macroeconomic variables.
“The overall easing of inflation, stabilisation of the exchange rate, falling treasury bills rates, increasing investments portfolios as well as rising aggregate demand are all signs that the economy is genuinely recovering,” said Lipenga.
The minister also defended the budget’s pro-business pitch, saying the poor stand to benefit from trickle down effects such as job creation as the private sector thrives.
Apart from opposition MPs in Parliament, Lipenga has also received a barrage of criticism from leading civil society activists who believe that the budget is not pro-poor enough, especially in terms of protecting low income Malawians from the adverse effects of reforms.
He said the budget has allocated K74 billion (about $185m) to social protection through the Public Works Programme, Social Cash Transfer and Farm Input Subsidy, which he said directly benefit the poor.
On Thursday, Mejn unveiled its budget analysis findings to parliamentarians in Lilongwe that, among other issues, said the budget is inconsistent with the Economic Recovery Plan (ERP) and the Malawi Growth and Development Strategy (MGDS) II.
Mejn noted that the budget has allocated more resources to general public administration (39 percent) than economic services spending (29 percent).
“The increase in public administration [that is increase in internal travel budget] is at the expense of economic growth generation,” reads the Mejn report in part.
The report also bemoans the under-funding of some key sectors such as trade, transport, tourism and mining which it says are vital to the ERP.
The Malawi Congress of Trade Unions (MCTU) has also put pressure on the National Budget.
In a press statement on Friday, the union said government should raise the zero percent threshold for Pay As You Earn (Paye) tax from the proposed K20 000 to K30 000 and reduce the percentage from 30 to 20 percent for the next K5 000 to put more money in Malawian workers’ pockets.
But Lipenga said the proposal is impossible owing to the “structure of the economy and our tax base.”
The minister also responded to last Friday’s petition by the CSOs led by Cedep and CHRR, which argued that health’s allocation of 12 percent of total budget is not in line with the 2001 Abuja Declaration in which African leaders committed to allocate at least 15 percent of the budget to health.
But Lipenga said the budget has met that requirement.
“Over and above this allocation [the 12 percent to health], resources amounting to 16 million British pounds [K14 billion] have been provided by DfID for direct purchases of drugs. When added to the resources of the sector, then the requirement of allocating 15 percent of the budget to health is met,” he said.
