Malawi MPs approve K210bn ‘provisional budget’:  Finance Minister unsure of donor support

Malawi Parliament on Friday approved a provisional budget allowing government to spend MK 210,178, 188, 689 billion up to October when the annual financial plan will be tabled.

The provisional budget was tabled by Finance and Economic Development Minister Goodall Gondwe who told National Assembly that the preparation for this year’s national budget has delayed because of shortage of time between the conclusion of Tripartite Elections and the time, June when the budget should have been ready.

“This is insufficient time for the [new] government to undertake valued budgetary consultations with different stakeholders for their contributions to the budgeting process,” Gondwe said.

Finance Minister Gondwe on arrrival at parliament to present provisional budget
Finance Minister Gondwe on arrrival at parliament to present provisional budget

Gondwe also told lawmakers that the budget has been delayed due to prolonged discussions underway with the donor who have not yet indicated their final decision regarding their support to the budget.

“I have been discussing with the donors to support the budget but they have not yet indicated their final decision regarding their support to the budget,” he said.

“Malawi is on an International Monetary Fund (IMF) economic programme and it is required that before we finalize our budgetary framework we should discuss it with that institution which is in July,” Gondwe informed MPs.

“Adding that a case in point is that the accumulation of unpaid bills (arrears) amounting to MK158.5 billion and a domestic debt stock of K340 billion a situation that has been left behind,” he said.

The donors have funded 40% of Malawi’s budget, but much of the support is frozen due to the “Cashgate” corruption scandal dating back from 2005 and arguments about governance issues which became worse under Bingu Mutharika’s administration.

Malawi is one of the world’s poorest countries. Its population has risen to 17-million and the economy remains heavily dependent on aid, remittances and tobacco, a globally unpopular crop.

The loss of budget support will spell disaster for the country.

Economic commentator Mabvuto Bamusi, now President Peter Mutharika’s aide, is on record saying the suspension of aid will likely contribute to a rise in inflation that would in turn lead to the rising cost of living.

He warns that Malawi could slide back to the situation that existed under the late Bingu wa  Mutharika’s leadership when, in the absence of donor aid, the country suffered from acute shortages of foreign exchange, a fuel shortage crisis, and a souring business environment.

Finance spokesperson of opposition Malawi Congress Party (MCP), Joseph Njovuyalema, urged the government to work for the interests of the people considering the effects of donor withdraw of the budget and appealed to the government to neutralize the problems that will arise due to shortage of funding.

“Let us serve the interests of Malawians,” Njovuyalema said.

Deliberations are suspended till Monday morning whereby the Minister of Gender, Children, Disability and Social Welfare, Patricia Kaliati will deliver a statement on activities of the ministry for the financial year 2014/2015.

Parliament meeting will adjourn on July 4 next week Friday.—(Additional reporting by  Mana)

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