By Taonga Sabola & Mathews Kasanda:
At exactly 16:09 Wednesday, members of Parliament passed the K2.84 trillion 2022-23 National Budget, allowing Finance Minister Sosten Gwengwe to use Malawians’ hard-earned taxes from April 1.
The passing of the budget must have come as a source of relief to the youthful finance minister, who now faces real challenges as events both on the local and global scene over the past few weeks have distorted most of the assumptions on which the budget was premised when it was presented on February 18.
For example, Russia’s invasion of Ukraine has pushed up the cost of fuel on the international market, driving up commodity prices and threatening to throw the budget off-balance.
On the local scene, the impact of back-to-back storms Ana and Gombe have crippled power production, threatened crop production and left many people in desperate need of help.
Gwengwe’s biggest prayer, as he starts implementing the budget, is that the exchange rate does not run away.
Although the Kwacha has been trading at around K850 to the United States (US) dollar in authorised dealer banks, the greenback has already hit the K1,000 mark on the black market.
The budget was passed with no changes despite lawmakers raising concerns on the allocations going over some ministries and departments.
Speaking after lawmakers passed the budget, Centre for Research and Consultancy Director Milward Tobias observed that it was clear that some of the assumptions in the budget, including the assumption on inflation, might not be met.
Tobias said the implication of that is that the budget would buy fewer things than earlier assumed.
He noted that the government needed to tighten fiscal discipline by, among other things, focusing on minimising administrative costs and concentrating on service delivery.
Speaking to reporters Wednesday, Gwengwe, who was named Finance Minister early this year, could not hide his excitement after the successful passing of his maiden budget.
“We will be moving forward to make sure that all MDAs [ministries, departments and agencies] are properly aligned to make sure we go in an overdrive as far as implementing the things that have been put in the budget is concerned,” Gwengwe said.
On whether the government would, through Malawi Revenue Authority (MRA) agents, be able to collect over K1.5 trillion for the budget, Gwengwe indicated that there were indications that the figure could be surpassed.
“When we are doing revenue estimates, we take into consideration quite a lot of factors. We anticipate that we should be able to reach not only K1.5 trillion but K1.6 trillion,” he said.
Gwengwe cited decentralisation of revenue collection to districts, as one way of reaching out to people who have not been active taxpayers to MRA, as one of the factors that were raising the prospects of collecting more revenue.
Democratic Progressive Party spokesperson on financial matters Joseph Mwanamvekha said lawmakers passed the budget just because the government could not do without the financial plan.
Mwanamvekha said most MDAs, including education and health, had been allocated resources that are below the Abuja Declaration.
“But we can understand the challenge the minister has because of where we are coming from because of the Covid situation. That we do not have donor support is also understood. But, in terms of taking us towards Malawi 2063 agenda, that would be a challenge,” he said.
The former minister of Finance went on to say that the Kwacha official exchange rate was at 825 against the US dollar while on the black market it is at 1,200, which is the actual value.
“Prices of goods and services are increasing because the dollar is not being bought at a realistic rate; as such, the prices would keep going up. You will see this budget becoming valueless shortly because prices are going up,” he said.
Leader of the House Richard Chimwendo Banda thanked legislators for passing the budget indicating that it was now “time to start the work”.
The House passed the remaining 13 votes yesterday, including the K1.37 billion vote for Malawi Human Rights Commission, Malawi Electoral Commission’s K4.3 billion as well as Ministry of Natural Resources and Climate Change’s K9.6 billion vote.