As Members of Parliament (MPs) prepare for their next sitting expected next month, it is important to remind them that their core task as people’s representatives has never been more serious.
This time, their main task is to discuss the Mid-Year Budget Review Report for the 2012/13 fiscal year that Finance Minister Dr. Ken Lipenga will table in the august House.
What makes their task so poignant this time around is the historic economic crisis the country is facing and the devastating effects it is having on households—rich and poor.
The sitting also comes a few weeks after consumers protested against the galloping cost of living that some say has been worsened by the policies contained in the 2012/13 budget statement.
The social chaos the economic problems can bring, if left unchecked, make their imagination scary. There is no doubt that some of the factors affecting us are exogenous. We have little control over them. For example, the world economy is yet to recover from the global recession that was sparked by the financial crisis of 2008-2009.
The United States and Europe, our major trading partners and aid benefactors, were the hardest hit.
Most developed countries are so broke and so indebted that they have had to embrace austerity measures themselves.
The economic situation in these countries has not only put their aid commitments in doubt, but also suppressed demand for our goods as their companies and households cut back.
When it comes to fuel, everyone knows that Malawi is not an oil producer—at least not yet anyway. We are, therefore, at the mercy of a cartel of countries that have oil reserves.
Any change in oil output—whether planned or caused by political unrest and terrorism—affects global oil prices. As a country, there is nothing we can do about this either.
But what matters is the policy response to these emergent problems. Unfortunately, the policies have been unsatisfactory and largely ineffective.
It is this policy failure that MPs must interrogate and find solutions to when they meet in Parliament in the next few weeks.
Thus, the national budget, which implements policy prescriptions, is the best starting point and the Mid-Year Budget Review Report offers an excellent opportunity to look at the current economic challenges in a holistic, objective and bi-partisan manner. That includes special interest in how the budget has been executed so far.
For the record, the half-year report on the performance of government in implementing the national budget in the first six months of the current fiscal year provides a comprehensive analysis of the revenues; status of grants and loans and expenditures of government.
According to the Ministry of Finance, the financial report’s main objective is to appraise all stakeholders on the current status of national budget implementation, including risks and challenges associated with it so that where necessary, corrective measures are instituted much earlier to salvage the situation.
This objective, as brief as it is, sharply summarises the terms of reference for our MPs in this budget process.
The Joyce Banda administration said their first budget is a recovery and austerity one—never mind the contradiction. Well, we all know that this fiscal plan has not recovered anything.
If anything, it has left the country worse off given that economic growth may in fact have been negative in 2012.
Inflation, which was projected to average 18 percent by December last year, is pulling away so fast that Reserve Bank of Malawi Governor Charles Chuka has been panting after it for seven months without success.
With purchasing power gnawed by the monster that is inflation, consumer spending has plunged, hitting aggregate demand hard and crippling the very private sector touted as the engine of growth. Interest rates, at commercial rates of more than 35 percent, have been so prohibitive to the real sector that has hit investment, business expansion and output in general.
When it comes to austerity, supporting measures are being implemented selectively. State House has already blown its entire budget and, without Parliament’s approval, heaped more money on its vote that it has also spent like funds grown on trees.
The politically rewarding Farm Input Subsidy Programme’s budget has been increased by 50 percent from K40 billion to K60 billion. Who authorised the Executive to unilaterally hike spending without the National Assembly approval? Meanwhile, some ministries are being underfunded to the detriment of service delivery.
I would like MPs to take the Minister of Finance to task to justify these fiscal decisions. If Lipenga cannot account, then Parliament should reject outright any supplementary budget bill. Passing it will be a tragic failure by the Legislature.