Malawi: Speaker Withholds Finance Committee Scrutiny On Budget After MPs Challenge Ganda

29 September 2020

Speaker of Parliament Catherine Gotani Hara has pended the Budget and Finance Committee of Parliament scrutiny to the 2020/21 national budget as presented by the Minister of Finance Felix Mlusu after some members of her committee claimed her response was not part of the original report they had unanimously agreed.

Ganda, a Democratic Progressive Party (DPP) legislator for Nsanje Lalanje Constituency, maintained that what she was presenting in the House was a true reflection on the committee's scrutiny to the financial plan, saying some members who opposed were not present when the committee had agreed its contents.

"Some of the members that protested were not there at the meeting," said Ganda.

Speaker, however, had to pend the report "until it is investigated."

In her statement, Ganda described most of the assumptions in the budget such as 1.9 percent GDP growth rate for 2020 as ambitious.

A former banker, Ganda asked government to be more realistic in generating statistics which she said are crucial in the entire budget process.

The budget and finance committee of Parliament also advised the government to consider reallocation of budget resources to productive sectors in order for the country to recover from Covid-19 and grow the economy.

Ganda noted that the 2020/21 national budget has minimal locally financed allocation pegged at K100.9 billion while K410.3 billion is from foreign financed projects.

On this, she said it is clear that the budget is counterproductive because it has huge leaning on foreign financed projects as opposed to having significant locally financed allocation.

Ganda called for more investment into social protection programs that will build resilience amongst the least income earners with the view to reduce economic Inequalities between the rich and the poor.

She also described the budget as based on unrealistic assumptions that will be hard to attain given the impact of Covid-19 which is significantly slowing down the economy.

Ganda said the former DPP regime passed on a healthy and stable economy to the Tonse Alliance government which needed to be sustained without struggles.

Though pro-poor to some extent, the budget, titled 'Living the promise,' to a large extent also lacks key features of a development and transformative budget, with development expenditure at K511.2 billion representing 23 percent of the total budget chunk, hence failing to pass the development budget test as it falls below a 25 percent threshold.

Of the K511.2 billion development budget, K410.3 billion is for foreign financed projects while K100.9 billion is for domestically financed projects, according to Mlusu.

Most economic experts christened the 2020/21 budget as a consumptive financial plan with wages and salaries alone allocated K523.7 billion which is 7.3 percent of GDP--and hovers above the development budget.

Such an allocation of wages and salaries represents a 13.5 percent increase from last year's preliminary outcome and is on account of K42.7 billion for general salary increment, K14.3 billion for employer contribution to the Contributory Pension Scheme, K8.1 billion for annual wage creep, and K8.0 billion for recruitment of health personnel.

As if that is not enough, interest payments have also eaten into a huge chunk of the budget at K376 billion, which is 5.3 percent of GDP, representing an increase of 43.8 percent from the 2019/2020 preliminary outturn.

Foreign interest payments have been projected at K11.9 billion while domestic interest payments have been projected at K364.2 billion.

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