MPs go into clusters to critique K1.3 trillion Malawi annual budget

Members of Parliament are now  scrutinizing the 2018/2019 Budget Statement through cluster format and improve provisions in government’s proposed economic blueprint.

In the past, MPs have come under fire for hurriedly passing the budget without informed analysis or scrutiny of allocations as outlined in all budget documents.

The proposed budget  has received mixed reactions from various sectors of the society including economists.

On Friday, Minister of Finance Goodall Gondwe presented a K1.3 Trillion  budget, the fifth and last financial blue print the House will consider before the 2019 general elections.

However, the cluster meetings will likely focus on justification to allocations for the so called “winners” and “losers” in the proposed Budget.

The national budget has been increased by 26.1 percent from the 2016/2017 revised budget which, was at MK977.8 billion. It registers a 13.5 percent increase at current prices, but declined somewhat in real terms.

Finance Minister Gondwe said in current prices, the total revenues and grants are projected to increase by 13.3 percent, and to be slightly reduced, particularly as regards grants, which he said are projected to decline by 8.4 percent.

Gondwe also said domestic revenue is budgeted to increase by 17.0 percent, and remains at the same level in real terms.

The Minister observes that the true of recurrent expenditure, will decline in real terms from 20.5 percent to 19.1 percent of GDP, whereas development expenditure will increase by 32.6 percent in current prices, and register a slight decline in real terms by 0.6 percent of GDP.

Gondwe disclosed that the wages bill will increase by a total of 10.0 percent, but with wage creep of 3 percent, the total wage increment will be approximately 13 percent.

The major key highlight benefits for low income Malawians in the budget, includes the raising of tax-free PAYE from MK20,000 to MK30,000; and the minimum wage has been increased from MK19,000 to MK25,000 per month. This means that all the people who earn a minimum wage, will be below the threshold of tax-free PAYE.

In the fiscal plan, there is a proposed 200 percent increase of pensions of civil servants who retired prior to 2004; the budget in this category has increased from MK50 billion to MK70 billion.

The majority of the budget is shared by the ministries, with including Education getting MK235 billion, Agriculture, MK192 billion, and health will get MK129 billion; this marks these departments walking away with 18, 15.5, and 9.5 percent, respectively.

Parliamentary Budget Committee chair Rhino Chiphiko hopes MPs will not merely rubber-stamp the financial plan.

Chiphiko, who is also MP for Lilongwe City South West for Malawi Congress Party (MCP),expressed frustration that during the cluster meetings, the government continued to flex its muscles unduly by not releasing the actual figures of expenditures for the previous year.

“This is the biggest problem our budget documents have. We end up comparing the proposed estimates to the previous year’s proposed estimates and not to the actual figures of expenditures. What this means is that MPs are not able to assess the performance of the previous year’s budget,” Chiphiko stated.

He added: ”This has been the trend for the previous three years. The Executive has been hiding actual figures of expenditure and the Legislature is always suspicious as to why the Executive is fond of hiding these figure.”

Chiphiko expressed disappointment that the government tends to ignore even bright strategic counterproposals from members of opposition parties, hence the government budgeting flaws receiving endorsement, especially where the proposed blueprint is given numerical support.

Chancellor College economics Professor Ben Kalua said government needs to move quickly in levelling the playing field during budget time by providing the MPs with the actual expenditure details they need for their effective oversight role.

Parliament Standing Orders adopted in November 2013 established cluster committees, which are formed once the Minister of Finance tables a motion that the estimates of expenditure on revenue and development be committed to a committee of the whole House.

Specifically, Standing Order 137(2) states that once the minister has tabled the motion, debate is adjourned for 10 working days to allow for a thorough examination of the allocations.

Gondwe tabled a K1.5 trillion fiscal plan, which is 13 percent higher than the K1.1 trillion 2017/18 revised budget, representing 22.8 percent of the GDP, which he said is poised to spur economic growth and address concerns on the rising cost of living among majority of Malawians.

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