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Goodall justifies K19bn Fisp allocation cut

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Minister of Finance, E c o n o m i c Planning and Development, Goodall Gondwe, has said government will still provide farm inputs under Farm Input Subsidy Programme (Fisp) to the maintained 1.5 million beneficiaries amid K19 billion allocation cut by shunning contracts expressed in dollars.

In a budget statement which he presented in Parliament on May 22, Gondwe said the government will continue with the implementation of the programme in 2015/16 financial year and will maintain its target of reaching out to 1.5 million beneficiaries.

However, Gondwe said it is intended that the cost of the programme should be limited to K40 billion in 2015/16 financial year, which will be a considerable saving over the amount of K59.7 billion spent on the programme during the 2014/15 financial year.

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In an interview on Thursday, Gondwe said the contracts expressed in dollars have made Fisp an expensive programme as the government is forced to pay more to suppliers and transporters when the kwacha depreciates. According to Gondwe, the signing of kwachaexpressed contracts will enable the government to save K10 billion or more.

The Finance Minister said Fisp transportation costs will also be dealt with differently in the next financial year, thereby saving some amount than before.

“The good deal of expenditure we made was that we shouldered exchange risks ourselves. In other words, the contracts which we signed were in dollars and we spent a lot of money on that,” Gondwe said.

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Some quarters,including the Parliamentary Committee on Agriculture , Irrigation and Water Development have said they are interested in the mechanism that the government will use in serving the same number of Fisp beneficiaries using the reduced allocation.

But Gondwe, who noted that last year the government spent more on Fisp due to the massive depreciation of the kwacha, said the calculations that the ministry has already done show that the system will work and Malawians should expect it to be a success.

“For example, if the exchange rate was at K100 now and when you come to pay for it you are going to pay at the rate current at that time and if the rate moves from K100 to K120, for example, it means for the fertiliser that was going to cost you K100, will cost you K120 at the time when you are paying.

“We will do it and we are quite determined. You know the point now is that as far as the total revenues and grants for the budget are concerned, the figure is low. Therefore, as a country we have to be working on sums that will give us the possibility of doing more for less money. All of us should be thinking about that,” Gondwe said.

He, however, said he is not ready to comment on whether the farmers’ contribution to the programme will remain at K500 or not. Chancellor College economics expert, Ben Kalua, said the reduction in Fisp allocation and the subsequent plans show that Gondwe is now flexible on his views about the programme. “We have been talking about efficiency in the administration of Fisp.

It seems he is now accommodating views from people who participate and contribute to budget consultation meetings. Efficiency gains can make up for what may have been lost. It shows we are being smarter this time around by using fewer resources in achieving the same goal.

“ The biggest beneficiaries of the programme have not been the poor farmers. The biggest beneficiaries were transporters and suppliers. So, if we can cut the costs that go to these middle people, the programme can be achieved without the deducted money. We should also think of increasing the amount of money that farmers contribute to the programme,” Kalua said.

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