Some forgotten issue in 2012/13 national budget

As expected, Parliament on Wednesday passed the K406 billion ($1.6bn) 2012/13 national budget. Of the total planned expenditure, 31.6 percent will come from Development Partners (DPs) while 60 percent will be funded using locally-generated resources, with the difference (K13.5 billion) being the deficit.

As President Joyce Banda, Finance Minister Dr. Ken Lipenga and the People’s Party (PP) administration celebrate the passing of their maiden budget, there are a few areas I need to point out because they were not emphasised enough during most of the coverage of the national budget.

Firstly, Banda and her vice’s offices have received more allocation increments in the 2012/13 national budget than, say the Ministry of Health, whose budget has been cut.

This raises questions about the President’s commitment to suffer with everyone as her administration pursues a tight fiscal regime that has denied people the much-hoped for tax relief. Cabinet Ministers are still driving their expensive Mercedes Benz and VXs. The President’s convoy remains long despite promises to cut and a decision on the presidential jet is still elusive.

My simple analysis of the output-based budget (Budget Document Number 5) shows that the allocation to State Residences has jumped by 18 percent or K275 million from a 2011/12 approved estimate of around K1.568 billion to K1.843 billion in the next financial year. The Office of the President and Cabinet (OPC) has gained nearly 21.6 percent or K760 million from an approved K3.519 billion in 2011/12 to K4.279 billion in the 2012/13 budget.

The Office of the Vice President, currently occupied by Khumbo Kachali, has an increment of more than 363 percent or K468.41 million from about K128.85 million in the 2011/12 budget to K597.26 million in the 2012/13 fiscal year. So much for austerity! What extra work will this fellow be doing to justify the obscene triple digit jump in its allocation?

The ridiculous increment to the Vice President’s office becomes even chaffy if you consider that the Ministry of Health, weighed down by critical drug shortages in public hospitals and health centres, has actually seen its allocation slashed by about K23 million.

The ministry got about K26.767 billion in the 2011/12 budget but has this time only received around K26.744 billion, a development that could affect the ministry’s operations.

Lipenga, in his budget, said K1.6 billion from the health sector’s 2012/13 budget is for the purchase of drugs for central and referral hospitals. I wonder how much drugs this money can buy given the massive depreciation of the local currency, the Malawi kwacha. There is also the question of how much the budget cut to the Ministry of Health will impact on its other operations and the ability to provide quality health services.

Malawi Health Equity Network (MHEN) executive director Martha Kwataine, in an interview for this entry, said the health sector is grappling with many problems, including shortage of drugs and low motivation for medical workers which, she said, call for increased funding.

Again, the 363 percent increase in the VP’s budget is also more than the 37 percent increase in the budget for the Ministry of Education, Science and Technology which has been allocated about K55 billion in the next financial year from around K40 billion in the 2011/12 budget.

Civil Society Education Coalition (CSEC) executive director Benedicto Kondowe, who was also interviewed for this piece, said while it appreciates that education has received the lion’s share of the budget, the increase to the sector is not enough given the myriad of challenges it faces.

“Looking at the challenges in education, one would have expected that the increments to the Vice President, OPC and State Residences could have been lower than the percentage increases to sectors that are critical to the social development of the country.

“In addition, we expect a government that is preaching austerity to walk the talk. Considering that allocations to the Presidency fall under statutory expenditures and are, therefore, not subject to debate in Parliament, government should have been responsible enough to trim this allocation,” said Kondowe.

In conclusion, I have said it before that this is going to be a very painful budget. Inflation and interest rates are already up. In fact, interest rates have been increased twice in a space of two months, with the second one being through a backdoor answering to the name of a special ‘discount window.’, triggering the second round interest rate hikes. The pain is just beginning.