Opposition Democratic Progressive Party (DPP) and United Democratic Front (UDF) Monday took turns to tear apart the 2024-25 national budget that Finance Minister Simplex Chithyola Banda presented two weeks ago.
DPP spokesperson on Finance Joseph Mwanamvekha described the K5.98 trillion fiscal plan as hypocritical, deceitful and dead on arrival.
Mwanamvekha said the assumption that the economy would grow by 3.6 percent in 2024 and 4.8 percent in 2025 is unrealistic and overly optimistic.
“As reported by FewsNet, the current rainy season has been influenced by El Nino such that there has been a delay in the start of the rainy season and most parts of the country have experienced severe dry spells, mainly in the Southern Region, lakeshore areas and in Karonga.
- Advertisement -
“As such, it is expected that the country’s crop production will be reduced significantly and the number of food-insecure households will increase,” Mwanamvekha said.
- Advertisement -
The former Finance minister and Secretary to the Treasury also faulted government over what he called not being serious with budget implementation and cutting down public expenditure.
He noted that over the last three years government has been over-spending by large sums of money over and above the budgets approved by the august House.
“For example, for the 2020-21 budget, this august House approved K2.2 trillion, but, by the end of that year, government had over-spent by a whooping K157 billion just in a single fiscal year.
“This puts to question the credibility of the budgets that we approve in this august House and this also casts doubt on achievability of the 2024-25 budget,” Mwanamvekha said.
- Advertisement -
He also questioned the K4.5 trillion revenue projections in the budget, saying the figures are rising astronomically without a convincing explanation on the sources of such resources.
Mwanamvekha said it is strange that, while Chithyola Banda is aware of the tax collection challenges, he has pegged revenue and grants collection at K4.55 trillion in the budget.
“More strangely, MRA [Malawi Revenue Authority], which failed to collect K2.24 trillion, is being asked to collect K3.26 trillion.
“DPP finds this to be unrealistic and unreasonable on the part of the Minister of Finance, taking into consideration the proposed tax measures the minister has outlined as part of the resource mobilisation strategy,” Mwanamvekha said.
On budget alignment to the Malawi 2063 vision, the former finance minister said the three main pillars for economic growth, namely agriculture, industrialisation and urbanisation, have not been provided with adequate allocations.
Among other things, Mwanamvekha observed that out of the total expenditure plan, agriculture has been allocated K497 billion, representing “only eight percent”.
“This is high level hypocrisy for an economy that is touted to have agriculture as its backbone. The industrialisation pillar has been allocated a miserable K64 billion, which represents one percent of the total budget.
“The urbanisation pillar has been allocated K155 billion or two percent only of the total budget. With a combined allocation of K716 billion, which translates to a meagre 12 percent of the overall budget, we should not expect industrialisation and urbanisation to start happening in a meaningful way soon and this will mean failed wealth creation and employment generation,” he said.
On his part, UDF spokesperson on finance Kapichira Mussa said his party has serious concerns about the economic status of Malawi with regard to the limited revenue generation capacity from taxes and increasing levels of unsustainable borrowing.
In his budget statement, Chithyola Banda admitted that at K12.56 trillion as of December 2023, Malawi’s debt had reached unsustainable levels.
“External debt reached K6.62 trillion, while domestic debt amounted to K5.94 trillion. The exchange rate realignment has exacerbated the external debt component.
“…Aware of the risks posed by contingent liabilities that lead to the growth of debt, such as guarantees, the government is developing a framework for managing contingent liabilities,” he said.
And according to Mussa, the economic recovery that has been touted in the budget statement is not sustainable and is an “artificial fix at best”.
“The expenditure requirements suggest that non-tax revenue generation should be enhanced while ensuring available resources are allocated to high-growth sectors that can have a high return on investment.
“Value-for-money should be our guiding principle in all our endeavours if we are to achieve Malawi 2063. UDF calls for urgent measures to address the highlighted shortcomings and ensure sustainable economic growth and development for the people of Malawi,” the lawmaker said.
Ntchisi South MP Ulemu Chilapondwa questioned whether it was proper for Mwanamvekha to criticise the current administration when he himself allegedly signed a dubious passport contract at the Department of Immigration and Citizenship Services (Dics).
Chilapondwa claimed Malawi is in trouble today because of the said contract.
He was apparently referring to the crisis at Dics which was, by the time we went to press yesterday, still failing to issue the travel documents following a breach of its system.
Leader of the House Richard Chimwendo Banda also faulted Mwanamvekha for just punching holes in the national budget without giving alternatives.
“Is that what it means to be in opposition?” Chimwendo Banda queried.
Today, the House is expected to hear the position of its budget and finance committee on the blueprint which Chithyola Banda said had been aligned with President Lazarus Chakwera’s State of the Nation Address, which was titled ‘Taking Stock and Advantage of Our Progress in Achieving Economic Recovery and Resilience’.
