Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
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. 2 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. 3 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 4 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 5 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. 6 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? 7 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 8 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. 9 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. 10 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. 11 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. 12 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 13 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 14 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? 15 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 16 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 17 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. 19 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. 20 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 21 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------- 22