Opposition queries budget trimming
Representatives of opposition parties in Parliament yesterday queried budget cuts to government ministries, departments and agencies (MDAs) and limited access to capital by small and medium enterprises (SMEs) in the Mid-Year Budget Review Statement.
Delivering his response to the Mid-Year Budget Review Statement that Minister of Finance and Economic Affairs Simplex Chithyola Banda presented in Parliament on Monday, Democratic Progressive Party (DPP) spokesperson for finance in Parliament Ralph Jooma said the reforms were hastily implemented and may not achieve intended results.
He said the government should have injected some “seed forex” into the local financial system and implemented immediate social protection measures to protect people from economic fallout in the aftermath of the 44 percent kwacha devaluation effected on November 9 2023.
Jooma, who is Mangochi Monkey Bay legislator, said delaying the cash injection would give the parallel market time to adjust their prices upwards, a development that will undermine the goal of directing forex back into the formal market.
He cautioned that the spread between the formal and parallel market will force the government to devalue the kwacha again, echoing sentiments by European Union Ambassador Rune Skinnebach, who last week announced a 60 million euro front loading to create a foreign exchange buffer.
Jooma also faulted the government for reducing the other recurrent transactions (ORT) for MDAs by a combined K760 billion when MDAs will need finances to implement the reforms proposed by the Tonse Alliance to get the economy back on track.
Taking his turn, United Democratic Front finance spokesperson in Parliament Ismail Rizzq Mkumba observed that the currency re-alignment has limited SMEs’ access to capital and, by extension, their capacity to conduct their operations and spur economic activity.
The Blantyre City Malabada lawmaker said the interventions that the government is implementing with its partners the Export Development Fund and Malawi Agricultural and Investment Corporation, among other institutions, have “strict and incomprehensible disbursement that are so complex that most useful small start-ups are failing to access these funds.
In his response during general debate session, Mzimba North legislator Yeremiah Chihana (Alliance for Democracy) questioned why the Tonse Alliance in August 2020 cancelled the previous Extended Credit Facility with the International Monetary Fund previous DPP administration sealed.
The Tonse Alliance cancelled the IMF programme amid allegations of misreporting of forex by the DPP administration and concerns that some of its flagship campaign promises such as the Affordable Inputs Programme would conflict with the fund’s conditionality.
