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Public finance Act under scrutiny

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By Alick Ponje & Richard Chirombo:

Centre for Social Accountability and Transparency (Csat) has called for the amendment of the Public Finance Management Act of 2003 to be in tandem with modern accountability trends.

Csat Executive Director, Willy Kambwandira, said this at the launch of a project dubbed Chuma Chathu Social Accountability Programme in Lilongwe.

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“The Public Finance Management law we are using is weak and not in line with modern public finance management systems and good practices that demand active citizen participation in fiscal decision-making and oversight processes.

“We should, therefore, amend it if we are serious about improving economic performance and general fiscal prudence,” he said.

He faulted the current law for only recognising the role of Minister of Finance, Secretary to the Treasury and other government controlling officers while being silent on the role of citizens in public finance management.

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“In the Act, public finance management is a preserve of the Treasury, the central bank [Reserve Bank of Malawi], the tax authority and a few selected technocrats. Parliament oversight on public finances is restricted too.

“The continued plunder of public funds in the country provides evidence of the need to seriously look at management of public finances in the country. The Act ought to be amended to be in line with the Constitution and other relevant laws such as the Public Audit Act and the Public Procurement and Disposal of Assets Act,” Kambwandira said.

He also queried t h e Unforeseen Expenditures vote, as provided for by the Public Finance Management Act, which is supposed to be approved by Cabinet, but the law does not make it an obligation for authorities to account for the expenditure.

Africa Diaspora Forum Malawi Chapter Chairperson, Edward Chaka, concurred with Kambwandira, saying most African countries are not benefitting from foreign remittances because of poor finance management laws.

Chaka said, due to loopholes in the Public Finance Management Act of 2003, Malawians living abroad feel duty-bound to contribute to national development because of lack of accountability in managing finances.

“We have to promote accountability to the best extent possible, and this means taking another look at laws that do not promote citizens’ participation,” Chaka said.

Diaspora remittances in 2018 rose to the equivalent of over 0.6 percent of Malawi’s Gross Domestic Product (GDP), according to a new report from the World Bank.

The bank, in its 2019 Migration and Development report, indicates that remittances have risen from $41 million [about K31 billion] in 2017 to $45 million [K33.7 billion] last year, an increase of over $4 million or about K3.8 billion at current exchange rates.

It indicates that, across sub- Saharan Africa, remittances grew almost by 10 percent to $46 billion in 2018.

Another report by the Bretton Woods’ institution issued in 2012 revealed that Malawi was one of the few African countries which is most expensive to send money to and faulted banks as the most expensive remittance service providers.

In terms of remittances as a share of GDP, Comoros has the largest share, followed by the Gambia, Lesotho and Senegal.

Kenya and South Africa are some of the countries in Africa that have amended their Public Finance Management laws to facilitate citizen participation and give legal powers to citizens to hold public officials and governments accountable.

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