Back Bencher

Who pays the bill?

Honourable Folks, here’s the crunch for the APM administration: It’s scoring highly on policy but is unlikely to deliver on its campaign promises because there’s no money in the kitty, will Malawians stick by it?

In what appears to be warning shots of hard times ahead of the budget, Finance and Economic Planning Minister Goodall Gondwe earlier in the week volunteered to declare government assets, oops, I meant liabilities.

Domestic debt is at K340 billion. Foreign debt is at $1.2 billion (over K450 billion). Taken together, government is saddled with a debt burden that’s equal to an annual national budget. According to Gondwe, servicing the debt would eat up a minimum of K92 billion from the budget every year.

Gondwe rubs it in by disclosing that despite its economic woes, the JB administration allocated as much as K30 billion to travel! In her time, JB showed a penchant for travel, moving from place to place within Malawi almost daily in an effort to garner votes for the May 20 2014 presidential election in which she flopped.

If she wasn’t going places within Malawi she would be on some intercontinental flight, going to some far away city with an excess baggage of chiefs and some family members who would be booked in expensive hotels for site-seeing and probably shopping.

While all that was happening, hospitals were reduced to departure lounges for needless journeys to dysfunctional mortuaries due to stock-outs of essential drugs and other materials. Security virtually collapsed as reduced operational budget forced the police to conduct most of their patrols on foot even in a big city such as Blantyre, the country’s commercial capital, which was allocated a paltry K2 million.

Standards of education continued to crumble as government failed to pay teachers on time, forcing some enterprising ones to abandon their classes for weeks and try to make some money through other means, including cross-border vending.

Now, while JB will busk for the rest of her life in comfort, enjoying a generous pension package at the expense of the taxpayer, the cost of her mediocrity and extravagance while in government is again pushed to the same taxpayer.

As I have said many times before, government doesn’t generate wealth. Rather, it thrives on money exacted from us, its citizens, in the form of tax and non-tax revenue. Donors have supplemented government’s domestic revenue with aid—constituting up to 40 percent of the National Budget—which comes in dollars, euros, pounds and other convertible currencies.

Apart from filling the gaping deficit, aid is also a major source of the much-needed forex, especially when tobacco, our major foreign exchange earner, is off- season.

This year, donors are non-committal on budgetary support and we may have to go on zero-deficit budget by default. Donors say they won’t give us their taxpayer’s money unless government seals loopholes in its public finance management tool to prevent Cashgate and other forms of corruption from eroding its kitty of public revenue. There are reforms in the public sector alright but nothing tangible so far to show APM is serious about arresting corruption which drains 30 percent of public revenue every year.

Now, out of the 2014/15 National Budget, take away 40 percent aid, take away 10 percent committed to FISP (Farm Input Subsidy Programme) which last year went up to K60.1 billion and take away K92 billion committed to debt repayment.

The question now is: How much more revenue will the APM administration need to raise and from where to meet its immediate needs which include increasing salaries for civil servants by at least 6 percent; subsidising iron sheets and cement for the needy; ensuring public hospitals are well-stocked with drugs; improving security; improving quality of education; increasing budgetary allocation to ACB (Anti-Corruption Bureau) and other watchdog institutions, etc.

Government also made a commitment to broaden the forex base by stimulating the growing of legumes for export. This will require heavy funding just like the pledge to create an environment conducive to the survival and growth of the private sector to create jobs, pay tax and serve as an engine for economic growth.

My take is that Malawians should brace themselves for significant tax hikes, a significant hike in various services government renders such as passport, vehicle registration and police reports. Over and above that government is also likely to increase its foreign debt which, although we may not have to worry much about now, is a burden on our children.

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