Friday, May 27, 2011

Malawi: Mutharika announces zero-deficit 2011 budget

By: Gregory Gondwe | 25 May 2011

The pulling out of donors in Malawi forced President Bingu wa Mutharika to announce on Monday, 23 May 2011 that, for the first time ever, Malawi will run a zero-deficit national budget. The announcement was made during his state of the nation address for 2011 which signaled the opening of the 2011/2012 budget meeting in Lilongwe.

"Mr Speaker, sir, Malawi is presenting a zero-deficit budget this coming financial year," Mutharika said. The president clarified this by saying, "In other words, our current expenditure will be financed entirely from our own resources." He said for development projects expenditure, he expects continued support from Malawi's development partners.

Commentators disagree

Some commentators and media experts have however, laughed off the president's suggestions. The Nation featured a scathing attack on his speech. It says the bottom line is that the president's lengthy but empty address has only succeeded in further puzzling an already puzzled nation and that it is scary.

"By devoting a lot of time regurgitating what Malawians already know - his 'achievements' since 2004 - the President sounded like an out-of-touch leader tethered to the past, when everyone around him is also concerned about the present and the future," the editorial reads in part.

BBC correspondent Raphael Tenthani says the president's address fell flat in answering critical issues.

Riding prior economic success

Mutharika said Malawi could ride on its economic success to achieve this zero-deficit budget considering that the national economy has been growing at an average rate of 7.6% since 2005.

"In 2010, the economy grew by 6.7%. This growth rate is well above the Malawi Growth and Development Strategy (MGDS) target of 6% and the average for the sub-Saharan region which was 5.5%," he said.

He said that this shows that the country is on track to reduce poverty and meet targets of the Millennium Development Goals of the United Nations by 2015. In 2011, real Gross Domestic Product (GDP) growth rate is expected to grow by 7.0% despite increasing world oil prices.

"I can confidently say that we have, as a nation, launched our economy on the road from poverty to prosperity," said Mutharika.

He then touted the country's inflation rate which he said remained at a single digit, declining from 8.4% in 2009 to 7.4% in 2010 due to increased food availability on the market.

"As a result, government continued to lower the Bank Lending Rate from 15% in 2007 to 13% during the 2010/2011 financial year," he said.

Ambitious plan, wrong time - lecturer

Mzuzu University senior lecturer Noel Mbowela feels Mutharika's zero-deficit budget is an ambitious plan that has come at a wrong time considering that the country has depended on donor support since independence.

"Malawi has not yet reached a stage where it can solely depend on local resources to finance its own budget without donor support," he said.
On the other hand, the country's economic think-tank the Malawi Economic Justice Network (MEJN) has hailed Mutharika for kissing bye to donor dependence.

"This is doable provided it does not impact heavily on tax payers," he said.

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Gregory Gondwe is a Malawian journalist who has bagged close to fifteen years of working experience who started writing in 1993. He is currently regional editor and bureau chief for Zodiak Broadcasting Station (ZBS). Gregory is also a media consultant assisting several international journalists pursuing assignments in Malawi. He holds a Diploma of Journalism and an Intermediate Certificate in Journalism among other media-related certificates. He can be contacted on gregorygondwe@gmail.com.