Malawi Budget 2015: APM blows own trumpet

KEY ISSUES IN THE ADDRESS

• Says he is delivering on promises 

• Government to recapitalise Yedef which failed due to politicisation. 

• Shire-Zambezi Waterway Project feasibility study results ready. 

• Government to build 15 440 houses under Malata and Cement Subsidy. 

• Domestic borrowing projected to be 1.1 percent of GDP, down from 4.1 percent. 

Malawi President Peter Mutharika blew his own trumpet in Parliament yesterday, telling Malawians his administration is delivering on promises made upon assuming power following his party’s triumph in the May 20 2014 Tripartite Elections.

In a State of the Nation Address that marked the official opening of a nine weeks long Budget Meeting of Parliament in Lilongwe, the President mentioned introduction of the Public Sector Reforms and strengthening of public finance management instruments to avoid a recurrence of Cashgate—the plunder of resources at Capital Hill—as some of the major promises his administration has fulfilled.

Mutharika said much as old habits die hard and that change could be painful, the reform initiatives such as a lean Cabinet, a pledge to reduce presidential powers in appointments and other measures to reduce public expenditure required everyone’s support.

In the speech that lasted one and a half hours, which he read out word for word unlike his inaugural one last year which he asked Malawians to read the rest on the Internet, Mutharika expressed hope that the conclusion of the fifth and sixth reviews of the Extended Credit Facility (ECF) by the International Monetary Fund (IMF) would trigger disbursements of funds from other development partners.

So far, only the African Development Bank (AfDB) has committed to supporting the 2015/16 National Budget while the rest of the donors have adopted a ‘wait and see’ approach to the government’s public finance management initiatives.

But Mutharika’s pessimism that donors would come back resounded in his call for public and business operators to support the government’s tax policy reforms.

Said the President: “Government has also taken steps to strengthen debt management practices and restructure payment of outstanding arrears and will avoid further accumulation of arrears through strict expenditure control measures.”

The growing budget deficit has also concerned Mutharika as he committed to reducing the deficit to levels below three percent of the gross domestic product (GDP) to reduce pressure on domestic borrowing and interest rates. Currently, the budget deficit stands at 4.1 percent of GDP.

He said: “All recurrent transactions will be largely financed by domestically generated resources with a modest net domestic borrowing of about 1.1 percent of GDP.”

On the Farm Input Subsidy Programme (Fisp), Mutharika fell short of outlining the “efficiency measures” to address challenges which have plagued the largely political programme.

He did not comment on proposals to increase contribution by Fisp beneficiaries from the current K500 per 50 kilogramme (kg) bag of fertiliser to K6 000, but Minister of Finance, Economic Planning and Development Goodall Gondwe is expected to do so when he delivers his budget statement on May 22.

As he patted himself on the back for a job well done in the past 12 months on health, gender and child development, Mutharika outlined plans to recapitalise the failed Youth Enterprise Development Fund (Yedef) to continue vocational and entrepreneurial skills training for youths. Yedef flopped largely because it was politicised with loan beneficiaries mostly linked to the governing party, notably Mutharika’s Democratic Progressive Party (DPP).

After observing a minute of silence for the 106 people confirmed dead and 172 reported missing during the floods early this year, the President said government will relocate affected communities to upland areas.

On insecurity, Mutharika did not directly comment on the growing cases of crime pointing to security breakdown, but announced that the number of police officers would increase by 1 874 following the passing out parade of new recruits next week.

“In the 2015/16 financial year, the government plans to procure an additional 100 police vehicles and build capacity in crime investigation through acquisition of appropriate equipment, training, [and] recruitment of criminal intelligence gatherers,” he said.

Under the new Cement and Malata Subsidy Programme introduced by the DPP administration, government plans to construct 15 440 houses nationwide, he said.

Leaders of political parties are expected to start responding to the address when Parliament meets this Wednesday afternoon.