Monday, June 17, 2013

Battle over Budget: Malawi Govt Vs. Civil Society

…Lipenga takes on Budget critics

Finance minister Ken Lipenga says the draft national budget is properly pro-poor and not mere lip service as some critics have described it.

Lipenga said this as he wound up debate on the 2013/14 fiscal year budget debate in Parliament on Friday afternoon.

“The overall easing of inflation, stabilisation of the exchange rate, falling treasury bills rates, increasing investiments portfolis as well as rising aggregate demand are all signs that the economy is genuinely recovering,” said Lipenga.

His statement comes in the wake of massive criticisms from the civil society organisations and private sector players who have described the budget as heavily bitched up.


On Thursday The Malawi Economic Justice Network unveiled its budget analysis findings to parliamentarians at crossroads hotel and among other issues said the budget is inconsistent with the ERP and Malawi Growth Development Strategy because it has allocated more to general public administration (39 percent) than economic services spending (29 percent)

“The increase in public administration (i.e increase in internal travel budget) is at the expense of economic growth generation,” reads the MEJN report in part.

Lipenga defended the increase in internal travel budget saying the increase is due to the elections budget, a one off expenditure for all who will be involved in election activities.

But a Friday Press Release by Civil Society Education Coalition and Malawi Health Equity Network has faulted Lipengas elections explanation saying the figures are questionable since there is already Malawi Electoral Commission to handle elections.

Lipenga also said the travel budget looks big because of an amount under the National Aids Commission Grants which has erroneously classified as internal travel and also due to another misclassification of Agriclture Sector Wide Approach expenditure from the World Bank which he said will be rectified.

The MEJN report also bemoans the underfunding of some key sectors such as trade, transport, tourism and mining which it says are vital to the ERP.


Bright Mhango - Wrote this story/did all interviews
The Malawi Congress Of Trade Unions also commenting on the Budget said in a Press Release released on Friday that Government should raise the zero percent threshold for Pay As You Earn (PAYE) tax from the proposed K20,000 to K30,000 and  reduce the percentage from 30 to 20% for the next MK5, 000 saying that would mean more income for the already poorly paid majority of Malawians.

But Lipenga said the proposal is impossible owing to the “structure of the economy and our (its) tax base.”


The Centre for Environmental Policy and Advocacy (CEPA) expressed concern the 2013 – 2014 budget allocation to issues of climate change, disaster risk management and environment management issues saying the allocations are insignificant.

 The organisation exposed to parliamentarians at Crossroads Hotel on Wednesday how for example the fertiliser subsidy programme gets 50 percent of the ministry of agriculture budget but ignores areas such as conservation agriculture  which got 0.16 percent.
Chadza - Budget not green

CEPA argues that areas such as conservation agriculture need more attention as unlike the subsidy programme, they are sustainable.

The analysis by CEPA also laid bare the meagre amount allocated to the Department of Disaster Management Affairs which has actually seen its budget slashed by 28 percent in the current draft budget to a mere K82.02 million.

“There is need for government to review and increase meaningfully the allocation for the department so that it responds effectively when called to duty, more especially now when disasters are becoming a regular and predictable occurrence due to climate change effects,” reads a report prepared by CEPA.


CSEC and MHEN say the increasing of the Education Minister’s budget by 33 perecnt while the general internal travel by 80 percent is questionable and unjustifiable when sectors like health need such resources.

“The explanation that the Ministers allocation of MK51 million per year is solely meant for procurement of furniture, office supplies and other expenses is unjustified considering that there are core departments whose allocation has only increased by 3 percent and some by 19perecent.

“In the eyes of outsiders, any claim about modest increment to the Ministers office is far-fetched, and sends wrong signals about Government’s commitment to austerity measures. It could also be a reflection of wrong priorities by government.

“Why should the Minister’s office in education spend 50% more resources than health in procurement of similar “furniture and office supplies”?,” reads a joint release from MHEN and CSEC.


Lipenga also responded to last Fridays petition by the CSOs led by the Centre for the Development of People (CEDEP) and The Centre for Human Rights and Rehabilitation (CHRR) in which the CSOs said the budget allocation to health of 12 percent is not in line with Abuja Declaration on 2001 which says nations should allocate a minimum of 15 percent of their budget to health.

Mtambo of CHRR - His petition was adressesd by Lipenga?

“Over and above this allocation (the 12 percent), resources amounting to 16 million British Pounds (K14 billion) have been provided by DFID for direct purchases of drugs…when added to the resources of the sector, then the requirement of allocating 15 percent of the Budget to health is met,” said Lipenga.

Budget not for the poor?

Lipenga also addressed concerns that the budget does not protect the low income Malawians from adverse effects of the reform. He said K74 billion has been allocated in the budget to deal with just that via the Public Works Programme, Social Cash Transfer and Farm Input Subsidy.

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