Download MCP Budget Response 2013-2014 Budget -Fnal

RESPONSE TO THE 2013/14 BUDGET
STATEMENT
by
THE MCP SPOKESPERSON ON MATTERS OF
FINANCE, HON JOSEPH NJOBVUYALEMA, MP
at
THE NATIONAL ASSEMBLY
DRIVING A FALSE
ECONOMY WITH
COUNTERFEIT
CHARACTERISTICS
Lilongwe
May, 2013
INTRODUCTION
Mr Speaker, Sir, I would like to extend my profound thanks
to you for allowing me to make a response to the Budget
Statement tabled in this august House by the Minister of
Finance last Friday.
Mr Speaker Sir, in giving my response, let me echo and
connect
with
what
the
Right
Honourable
Leader
of
Opposition said, as he asked relevant questions in his
response to the State of the Nation Address. I too have no
choice but to ask similar questions because the 2013/14
Budget Statement is a budget that is full of politically
motivated statements and politically crafted expenditures.
Mr Speaker Sir, the 2013/14 budget framework has
increased total expenditures of K638.1 billion against total
revenue of K603.3 billion. Mr Speaker, this is a dangerous
budget. It is a dangerous fiscal plan because expenditures
have massively increased by 34 percent dwindling non tax
revenue which has badly performed by K5.2 billion.
Similarly, the Minister of Finance is being too optimistic
because grants or donor inflows too have underperformed by
K5.1 billion. Mr Speaker, under normal circumstances,
Government
should
have
been
scaling
down
on
its
expenditures instead of increasing with an unsustainable
margin of 34 percent.
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Budget for Narrow Political Gain
This budget, Mr Speaker, is a political budget. It merely
reflects the desperate intentions of the Government to use
the budget to gain political sympathy and votes.
Mr Speaker Sir, from the word GO, let me state that the
Minister of Finance and the entire Government should desist
from abusing the budget for narrow political gains instead of
allowing the budget to work for all Malawians regardless of
political interests.
False Economy with Counterfeit Elements
Mr Speaker Sir, having carefully analysed the Budget
Statement and the budget documents provided, I have
decided to give a title to my response and the title is:
DRIVING
A
FALSE
ECONOMY
WITH
COUNTERFEIT
CHARACTERISTICS. Allow me to justify my choice of this
title.
Mr Speaker, a false economy is an economy which is full of
contradictions and a counterfeit economy is one which
operates on pretence and is driven by external dictates.
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Lip-service Recovery
This economy is making us believe that Government is in
charge when actually this Government has abandoned the
responsibility of protecting its own people from the hard
knock effects of the economy reforms. This is a false
economy because while the Minister vociferously claims that
we are recovering, the true picture on the ground is not one
of recovery but further marginalisation and poverty. The so
called recovery is only lip-service recovery.
Contradictory Economy
This is a false economy because where inflation is said to be
falling, yet commodities in the shops are still enjoying the
same high prices. This is a false economy because where fuel
prices are said to be falling, but at a very insignificant pace
and not enough to be noticed. It is indeed a false economy
because salaries of public servants are being increased at a
rate that is far lower than the degree to which purchasing
power has eroded.
The False Economy
Mr Speaker, while economic productivity relies so much on
reliable electricity, yet just recently, ESCOM has increased
electricity tariffs by 30 percent, to the dismay of all
consumers and it has further been announced that the
rising of tariffs will continue. Is this the manner of a
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recovering economy? That is why I always say that this
Government is running a false and counterfeit economy, and
that the economy itself, is simply benefiting the already
wealth and rich few, while the majority poor are falling into
deeper poverty.
The Malawi economy is a false one because while the Reserve
Bank has maintained base lending rate at 25 percent, the
commercial banks continue to charge interest rates at
exorbitant rates of over 40 percent and even 50 percent for
others. Is this a sign of an economy in recovery? Mr Speaker,
this is a false economy. Look at the high water tariffs and
water bills that people are paying to the water boards,
mmm?
Look at cell phone airtime tariffs or units, and how fast talk
time runs out when one is making a call, yet the service
providers have not adjusted downwards their rates. Which
economic progress is the Minister of Finance talking about?
Allow me Mr Speaker Sir to give another example of how
this one is a false and counterfeit economy.
The way domestic debt stock is piling is not at all a sign of a
recovering economy. At the moment, Domestic Debt stock is
around
K170
billion.
And
we
have
reports
of
how
Government is still hungry to borrow more from the Reserve
Bank using Treasury Bills. We also know how external debt
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is fast rising. We know the billions of Kwacha that
Government will have to repay to PTA Bank for all the money
we borrowed to purchase the current stocks of fuel. Do you
call that a recovering economy?
Celebrating While the People Continue to Suffer
Mr Speaker Sir, this Government is celebrating on wrong
things. How can it celebrate fuel supplies that are available
on account of a loan which is weighing heavily like a yolk
around our necks? Borrowed money- instead of celebrating,
this Government should have realised that many people have
packed their cars because they cannot afford the high fuel
prices. Why celebrate the availability of a commodity which
only a few can afford and was made available using borrowed
money?
What more evidence does Government want apart from the
fact that fuel levies are underperforming? Surely Mr Speaker
Sir, the Minister of Finance should have known that the
main reason fuel levies have underperformed, when fuel
supplies are available, is mainly because Malawians have
reduced fuel purchases due to unaffordable fuel prices.
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We do not have an Economy, Do We?
Mr Speaker, sometimes I wonder. Sometimes I wonder Mr
Speaker. I wonder if at all Malawi has any economy left.
We seem not to have any economy at all. I say this Mr
Speaker, because while the Reserve Bank is working hard to
manage the Monetary Policies and control inflation, the
Government is on the other hand busy messing up by
borrowing large sums of Kwacha on domestic market,
thereby frustrating the fight against inflation, and scuttling
the macroeconomic fundamentals.
Fiscal Policy inconsistent with Monetary Policies
Mr. Speaker Sir, Monetary Policies are being frustrated by
Fiscal Policies where the latter are being managed with bad
politics. Monetary Policies are expecting expenditures to
scale down. But Fiscal Policies have taken an expansionary
route through rampant over expenditures.
The current budget has overspent by about K3.3 billion
because this House approved K475.7 billion yet this
Government has ended up spending K479 billion. Where is
fiscal prudence in this case? The two sets of policies are not
speaking one language. They are contradicting each other,
and that’s why Mr Speaker I am repeatedly saying that this
Government is running a false and counterfeit economy.
Mmm?
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Salaries for Civil Servants
Mr Speaker Sir, civil servants have suffered over the ending
fiscal year. Their salaries have experienced significant
decline in purchasing power. As we speak, civil servants
continue to feel short-changed on the increment which was
given after a strike they organised, and the continued
devaluation of the Kwacha, even after that salary increase,
immediately reversed any gains made.
Now, Mr Speaker Sir, against all the cries from civil
servants, I am surprised at the figures in the Budget
Financial Statement (Document No.3), page 16, which shows
that wages and salaries have underperformed by K1.2
billion.
The Minister of Finance needs to explain why the underexpenditure has been registered on a budget line which in
true essence needs an increase.
Austerity Measures
Government
is
busy
overspending
through
the
ever
increasing number of foreign and local travels. Other
expenditures have been occasioned through price increases
as a result of the devaluation which obviously has made
planning on public finance a nightmare.
This country cannot experience economic recovery when
austerity measures spare members of the executive including
the presidency. It is to run a false economy to expect that
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the majority poor people should bear the burden of austerity
on behalf of the spendthrift few top Government officials. It
just can’t work Mr Speaker. It can’t- it won’t!!
Revenue Performance
Mr Speaker, allow me to make a specific response on the
revenue issues presented in this Budget Statement. The
Minister indicates that domestic revenue has over performed
by about K8.5 billion. However, this is mainly because of tax
revenue performance.
What the Minister is not saying with emphasis are the taxes
which have underperformed, and these include corporate
taxes from the mining sector.
It is a shame Mr Speaker that the private sector is called the
engine of growth, yet private sector taxes from key industries
like mining, are persistently not showing.
We are told Mr Speaker that Kayelekera mine is not yet
making profits, and I wonder how true that is. Is it because
we gave too much tax holidays to the mining companies?
Why can’t this Government implement lasting solutions to
the challenges faced by the private sector?
In addition, Mr Speaker, in as far as taxes from the mining
sector are concerned, somebody is not telling the truth, and
the Minister of Finance should tell us where the corporate
taxes from Kayelekera are going. It is better to explain
these things now than wait till the going gets tough.
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Let me say also that this 2013/14 budget is a dangerous
fiscal experiment because the Minister has removed too
many
taxes
without
announcing
compensatory
tax
measures. This budget is a gamble because it operates on
the assumption that tax revenue will continue to over
perform, yet fringe benefits tax has underperformed by K124
million. See page 73 of the Budget Document No.3. Similarly,
local excise tax has underperformed by K429 million. What
is the explanation of these areas of poor tax performance?
Poor Performance of Non Tax Revenue
Mr Speaker Sir, as said earlier, non tax revenue has
underperformed by K4.2 billion. This is a worrisome trend
and causes me to ask again why the Minister of Finance is
optimistic that he can spend K638 billion.
Yet almost all levies have underperformed, and these
include the Road Levy with the poorest performance of
about K4.1 billion, Departmental Receipts by close to K3
billion,
and
Rural
Electrification
levy
too
has
underperformed by K1.4 billion.
Mr Speaker, these areas need to be explained and the
Minister of Finance needs to justify to this House why he
needs more money in 2013/14, when non tax revenue is
under siege.
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Expenditures for Hosting SADC Summit
Mr Speaker Sir, SADC Heads will be meeting in Lilongwe this
August. As expected, the Government of Malawi will spend
tax payers’ money to pay for expenses that are associated
with a HOST AGREEMENT which obliges a hosting nation to
provide extra security, accommodation, and local travel for
the heads of state.
While the SADC Summit is an opportunity for Malawi, the
Minister of Finance needs to be transparent about the cost
which the tax payer will shoulder.
Government also needs to convince Malawians how they
shall benefit from hosting the summit through business
which the tourism, car hire, and hotel industry shall make.
Such a cost-benefit presentation of issues is needed for
purposes of transparency.
Elections Budget
Mr Speaker Sir, the 2013/14 financial year is also an
election year. Close to K18 billion is being set aside for
running the tripartite elections. While donors will contribute
to this elections budget, Malawian tax payers too will make a
significant contribution.
This is where I want to make a caution in that the K18
billion should be spent in a way that levels the playing field
for all political players in the electoral process.
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This money should not be used to finance the campaign of
one political party. This K18 billion is not for financing
propaganda for the ruling party. This money is for all
Malawians to have a free, fair and credible election.
Another caution is that this country should not come to a
standstill simply because we have elections. Hospitals
should still run, schools should still be funded, roads should
be constructed. Budget Votes should not be scaled down too
much to bring development to a standstill just because of the
elections.
Performance of Donor Grants
Mr Speaker, while 2012/13 is touted as one of the best years
in terms of donor budget support, it is important that the
Minister of Finance explains what has happened with the low
performance of donor grants.
For example, Program Grants have underperformed by
K6.6 billion. Why is this like that? NAC grants have also
underperformed by K1.5 billion. How can we conquer HIV
and AIDS like this? Grants for Education SWAP have a poor
showing of a staggering K7 billion. Are we serious about the
right to education?
Mr Speaker Sir, we need to know. If the problem is with the
donors, then donors too need to be held accountable in line
with the principles of the Paris Declaration on Aid
Effectiveness.
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If the problem is with Malawi government, let the nation
know what has gone wrong. I say so Mr Speaker because we
have some schools which have no teaching and learning
materials.
We
need
to
recruit
more
teachers.
This
Government has on a number of occasions paid teachers
salaries very late. Classroom blocks need to be rehabilitated,
and some schools are still using grass thatched structures
for classrooms. So, how can education grants underperform
by K7 billion under such circumstances?
Somebody needs to explain and its none other than the
Minister of Finance himself. So, I ask again, what has
happened with the funds under Education SWAp?
Performance of FISP
Mr Speaker Sir, during the Mid Year Budget Review of the
2012/13 budget, we were told that the FISP has spent K44.2
billion from its initial allocation of K40.8 billion. Currently,
some beneficiaries still have coupons in their hands, and
this raises serious accountability questions in the way the
FISP is being managed. Coupled with the fact that some
fertilizer bags had sand instead of actual fertilizer, I am
prompted to ask as to how many billions of Kwacha went
into people’s pockets through fraud.
As if that is not enough, the Minister wants to blow K60.1
billion in 2013/14 on FISP. The Minister should first of all
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explain how he misused the previous FISP before we can give
him another FISP.
In fact, the Minister has not told us how many farm
families or households or beneficiaries will take part in the
K60.1 billion FISP. Why is Government hiding the figures?
The poor management of FISP in 2012/13 amounts to
subsidizing of fraud where unscrupulous persons have
enriched themselves at the expense of poor small holder
farmers. Contracts were awarded in dubious ways. Other
suppliers and transporters were penalised on political
grounds.
The Minister of Finance should calculate and explain to the
whole nation the amount of loss in financial terms that has
arisen due to fraud and sand in this year’s FISP. Or else I
will urge this House through a motion to exercise its
Legislative powers.
Abuse of State Residence Vote
Furthermore Mr Speaker Sir, let me go deeper. I wish to dig
deeper into the financial scandals and abuses that rocked
State Residence vote in 2012/13.
State Houses overspent their approved allocation, and had to
seek extra funds. You will recall Mr Speaker that this House
approved K1.8 billion for State Houses, but they ended up
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using the money recklessly and overspent to a total of K3.6
billion.
This over-expenditure is unjustified because when State
House was busy wining and dining, poor people were dying
on ADMARC queues looking for maize which they could only
get 5 kilograms after waiting for 1 week.
Second, State House is suffering financial haemorrhage due
to excess travel. As we speak, Mr Speaker, someone from
State House has flown out of the country, and within a short
space of 12 months, over 15 external trips have been
undertaken.
All
this
excess
travel,
both
local
and
international is exerting fiscal pressure on the budget of
State House. Is this prudence? Let me promise the Minister
of Finance that I will tackle this vote again when we come to
Committee of Supply.
Proceeds from Sale of Presidential Jet
Mr Speaker, another area that the Minster of Finance should
have shed more light is on the sale of the Presidential Jet. It
is now known that the jet has finally been sold at US$15
million to a UK bidder.
Considering that we bought the Jet at US$22 million, so
what kind of business is this? How can we give up such an
asset at a huge loss of US$7 million? Let alone maintenance
costs we have incurred on it?
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Mr Speaker, there are two accountability issues here. First,
can Government explain how the proceeds from the sale of
the Jet will be used? Secondly, we hear that Government is
going
to
charter
aeroplanes
for
conducting
mining
exploration, so, how much will be spent to charter the planes
for mining exploration and whether the cost will not be
higher than the US$15 million expected from the sale of the
Jet.
Thirdly, Mr Speaker, we need to be assured that the US$15
million will not come at the expense of security, privacy and
respect of our Head of State, who may be prompted to travel
with ordinary passengers all the time, as we know she
travels a lot.
Expenditure for Hospital Drugs and Medicines
Mr
Speaker
Sir,
the
year
2012/13
shall
always
be
remembered as a period when drug shortage in our hospitals
reached its peak. It was for the first time when we saw
medical doctors openly petitioning the President over the
matter.
Today, and in this august House, we feel that there are still
more questions that are yet to be answered. Over K2 billion
was
spent
procuring
medicines.
And
in
2013/14,
Government expects to spend K14 billion on medicines.
But the concern is over the drugs that are being burnt and
destroyed by Central medical Stores, reportedly because they
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expired. Mr Speaker, why did the drugs expire before
distribution to the point of being burnt?
It makes no sense for health centres, clinics and hospitals
to run out of drugs to as low as nil percent, when other
drugs were left to expire and finally be destroyed.
Malawians deserve an explanation.
Youth Employment
Mr Speaker, Sir, it is unfortunate that the Budget Statement
is silent on expenditures for boosting youth employment.
The youth comprise a majority of our population and we
cannot continue to offer them lip-service by not allocating
specific funds for their employment opportunities.
This
Government is offering false promises to our youths.
Promises of jobs in other countries like South Korea and
Dubai while nothing is happening to create jobs at home, is
put simply, policy mediocrity.
When jobs are exported, it is not the Malawi economy which
will grow. When human capital is sent abroad, it is not
Malawi’s taxes which will grow. When our youths are flown
out of this country, we are simply creating brain drain and
loss of labour which we need for a broad based economic
recovery. OKY?
In fact, Mr Speaker, it is laughable and unbelievable,
because the more this Government is sending out our
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youths, the more people from other countries are coming to
fill the space vacated by our youths.
Foreigners are flocking into Malawi because they see
massive opportunities in this country. Why is it that this
Government is unable to see these opportunities available
locally?
Mr Speaker Sir, what the youths of this country have always
longed
for,
is
meaningful
opportunities
for
economic
empowerment right here at home.
It is possible to provide our youth with sustainable business
loans, proper training, and a good education that meets the
demands of contemporary careers. The problem Mr Speaker
is that this Government is not willing to invest in education
for our youths.
That is why our Universities are shut down again and again
and nobody seems interested to have them open and
running again. What this Government is interested in is to
turn our youths into modern slaves by selling them off into
voluntary slavery.
State of Development Expenditures
Mr Speaker Sir, the Minister of Finance has missed an
important aspect of our development, and that is, he has not
given accountability statements as to why our infrastructure
18
has dilapidated without visible rehabilitation, yet funds were
allocated in the 2012/13 budget.
All he has said is that K9.1 billion will be spent in 2013/14
for road maintenance of 35,000 Kilometres and to be precise
this K9.1 billion is for rural feeder roads. What about the city
and town roads?
Also we need to know what happened with the funds in the
just ending budget. A number of city and town streets have
grown bumpy and during the rainy months, some streets
were impassable due to huge potholes.
Key main roads have also not been spared Mr Speaker, for
example, when one is driving on the M1 road between
Lilongwe and Kasungu, the road is fast losing its edges. This
stretch of the M1 has developed some of the dreadful
potholes which are causing serious accidents. Yet this is the
area which is contributing 30 percent of our GDP through
tobacco.
The 2012/13 budget also allocated funds for other projects
like hospitals. It is disappointing though Mr Speaker that
some hospitals like Nkhatabay have taken a slow pace
towards completion, while Phalombe hospital is no where to
be seen despite the millions being allocated every year.
Mr Speaker, where is the money going? The same applies to
Zomba-Jali-Phalombe Road, many loans have been approved
for this road yet up to now, the road is still far from
completion.
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K4 billion was allocated in 2012/13, and this 2013/14,
K312 million is being allocated. I still ask, Mr Speaker, where
does Government take the money to for this road? The
Minister of Finance needs to respond to this, and he also
needs to tell us why Government is not interested in the
Zomba-Chingale road. Someone will have to account for
this in the near future!
More so, what about the new Security Prison which we
wanted to construct to replace Maula Prison. What about the
boreholes we wanted to drill in all our constituencies. Funds
were allocated in the 2012/13 budget for these projects.
What has happened?
Mr Speaker Sir, it can be seen that this is a wasteful
Government and has a tendency of incurring expenditures
which are needless and not budgeted for. Such expenditures
like procurement of the expensive Prado vehicles for
Ministers- needless. The payments of millions and millions
of Kwachas for unfair dismissals of people like Ligoya,
Nampota, Mukhito, Matabwa and others- so needless!
Mr Speaker Sir, is that good governance?
Let me also say something very briefly on governance issues.
The statements made by the State President to the effect that
it is the media which killed the former State President, late
Professor Bingu Wa Mutharika are very unfortunate and
unbecoming, not befitting someone who took over the reign
of power on a silver platter and took an oath to protect the
Republican Constitution just a few months ago.
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Lastly, let me raise the concern with the way our Universities
are being managed or mismanaged. These centres of
academic excellence have turned into centres of academic
inactivity. Every now and then the colleges are being closed.
Apart from the Students Loan Fund which this parliament
will discuss, I wish to recommend that Government should
find lasting solutions to the inactivity of the universities.
If
Government
cannot
manage,
let
them
honourably
handover leadership to able hands, and the MCP is surely
ready to bring back the lost glory of the universities in
Malawi.
Conclusion
In conclusion, Mr Speaker Sir, this budget is close to a raw
deal. It is a dangerous fiscal plan and simply electioneering
and politicking budget which will end into a huge deficit.
It has removed too many taxes without compensatory
revenue measures. Government must immediately abandon
this counterfeit process, stop falsifying this economy, and
the Minister of Finance should give us a true budget, not
this counterfeit budget.
Mark my words, or urgently make corrections to the budget
before you drag all Malawians into a fiscal abyss.
Listen twice as much as you speak and plan tomorrow’s
work today! Nothing sinks people faster in their careers than
arrogance, but humility is the mother of all virtues; and
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indeed you cannot get lost if you don’t know where you are
going!
pamsasa saipitsapo. Do not mess up things in this
country. Government should not mess the budget simply
because time is over and it’s time for them to pack and go—
NO, NO, and NO.
Lastly, I propose that Government should form a National
Planning Commission to be responsible for making crucial
decisions and ensure autonomy of state institutions. This
would help the country to have sound, sustainable and
continued
policies
in
its
transformational
endeavours,
regardless of who rules the country.
I thank You Mr Speaker Sir, AND THANK YOU ALL FOR
YOUR ATTENTION. May the Lord bless you all, THANK
YOU INDEED-------
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