Mixed views on Malawi’s 2014 – 2015 zero-deficit national budget


Business captains are giving mixed views on the plan by the Malawi government to draw up the 2014-2015 financial plan on assumption that the country will not receive donor support.

The Minister of Finance Maxwell Mkwezalamba earlier this week told the media that the government intends to come up with a zero-aid national budget.

The development followed the stance by the donors not to release the US$150 million budgetary support they withheld in the wake of the massive plundering of public resources at Capitol Hill in Lilongwe.

The Cooperation partners, through the Common Approach to Budgetary Support (CABS), also expressed concern over lack of prudent public finance management within the civil service.

Mkwezalamba said they want to reduce over reliance on the donors, hence the idea of coming up with a zero-aid budget.

However,  some economic commentators have warned that drawing the budget on anything resembling the infamous zero-deficit budget “would be clear madness” and an excuse not to work on the financial management failures that the donors are concerned about.

The Malawi Confederation of Chambers Of Commerce and Industry (MCCCI) Chief Executive Officer , Chancellor Kaferapanjira told the Daily Times that it was wrong for the government to come up with this idea as it is disregarding its duty of sealing the loopholes that led to looting of tax payers’ money.

He argued that the state miscalculated the ripple effects of being loose and allowing significant amount of public resources from both domestic and external sources to be plundered.

“Those involved and those who benefited from the plunder of the resources never thought they would be exposed. It must be emphasised that we should not always think in terms of donors suspending direct budget support.

“We, as Malawians, should also be thinking of taking appropriate measures to starve government of our direct budget support in the form of the taxes we pay. In fact, we give government 60 percent of its revenue while donors give only 40 percent. So it should hurt us more,” said Kaferapanjira.

He said Malawians should not always wait for donors to react.

“Yes we should start reducing donor dependence not because we want to shield a dishonest, rulebreaking government but because it is a good thing to do.”

He warned that the plan that government is working on would reduce the country’s resources into tatters.

“In fact at that time [when zero-deficit budget was introduced in 2011], we should have stopped paying taxes to a government that was in breach of the basic rules of economic governance.

“We should never have allowed the zero-deficit budget to have been implemented by a government that was running away from doing the right things. It was a crazy idea,” he said.

Kaferapanjira said government needs to behave and use people’s resources from both domestic and external sources for their intended purposes.

He added that no government can justify abuse of public resources whether to donors or to its citizens.

On the other hand, another commentator Henry Kachaje said despite enjoying full budget support from the donors, the country erred in totally disregarding the zero-deficit financial plan.

But he said what needed to be done was to devise a proper strategy of dealing away with the donors’ percentage of contribution so that the country is not taken by surprise.

“This is not the first time the donors have pulled out. It also happened during the rule of United Democratic Front and the Democratic Progressive Party.

We should have been treading carefully when the donors came back [in 2012] to make sure that any pull out should not surprise us,” Kachaje was quoted by the Daily Times as saying.

But Executive director of the Economists Association of Malawi, Nelson Mkandawire has applauded the government’s decision saying it is high time Malawi stood on its own financially without donor support.

He however cautioned said as long as the country does not find ways of reducing donor dependence, Malawi will always be caught in dilemma every time donor support is no longer assured.

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