Make the national budget do the magic
Now that dust has settled after Parliament passed the K5.9 trillion 2024/25 National Budget and the subsequent Appropriations Bill that authorised Ministry of Finance and Economic Affairs to raise revenues and spend in the fiscal year, I feel it is the right time to share my views on budget implementation.
In his winding up speech on the budget, Minister of Finance and Economic Affairs Simplex Chithyola Banda on March 25 2024 told Parliament that he was hopeful his maiden financial plan for the nation will achieve its objectives. This was in direct response to concerns raised by some opposition legislators and some parliamentary committees that the plan was built on “unrealistic and overly optimistic projections”.
The fears emanated from the fact that as an agro-based economy, Malawi’s economic growth is more dependent on performance in the agriculture sector. The country’s reliance on rain-fed agricultural production puts the economy at the mercy of weather as is the case now where 23 of the country’s 28 districts are expected to have reduced production due to a combination of prolonged dry spells and erratic rains. Of course, this is something that can be overcome with sustained investment in irrigation farming and diversification.
Passing the national budget is one thing, but implementation is the most critical stage as this is what can make the difference.
To me, budget implementation has been a major cause for worry over the years as the fiscal plan always ends up being dismantled during Mid-Year Budget Review where allocations to the development budget and productive sectors are the major victims. Not that the budget cannot be modified, but where this happens there should be justification for doing so.
When the budget is dismantled at will, its credibility suffers. Major overhauls to the budget can be avoided or reduced by ensuring strong accountability mechanisms and avoiding “wrong” assumptions that erodes its credibility.
It is my sincere expectation that the credibility of the budget will not be undermined during Mid-Year Budget Review through allocation cuts in key sectors to benefit others. The fears are founded given that this is an “election year” where the political parties in power tend to throw all caution to the wind to garner votes, but at the expense of the bigger objective of achieving meaningful economic growth that can reduce poverty.
Budget credibility can also be improved through enhanced oversight by Parliament, especially through the Budget and Finance Committee as well as the Public Accounts Committee which should be empowered to provide proper scrutiny of the expenditure reports to ensure fiscal discipline.
National budgets should not be seen as an event, but a process as it is through such expenditure plans that governments around the world implement their development plans to foster economic prosperity and reduce poverty.
In other words, national budgets go beyond figures as they are a contract between a government and its citizens to deliver on the promises, as such, where the plan is needlessly overhauled midway, it is a breach of contract.
The 44th President of the United States, Barack Obama, summed it up better when he said about budgets: “A budget is more than just a series of numbers on a page. It is an embodiment of our values.”
If budget implementation is to be a success and translate into people’s improved welfare, our duty bearers should grab a tip from Obama and start looking at the national budget from the perspective that it is a contract setting out the values and aspirations of government to improve people’s lives.
Make the budget work and where things get tough, the leadership should take the lead in tightening the belt by cutting down on some expenditures, instead of denying the masses social amenities such as access to quality education, health and roads.
