Zero-deficit budget is misleading

Finance Minister Ken Kandodo delivered the 2011 budget statement in parliament where Malawi will spend K307.7 billion.

But the emphasis and DPP rhetoric that it is a zero-deficit budget is misleading and a clever distraction from the main crucial elements of the budget this year.

The recurrent component of the budget as presented has zero deficit. However, the development component of the budget will require government to source funds externally either through donors or borrow from the market.

The development budget is a crucial part of the budget and this is lost in the zero-deficit buzz.

Nonetheless, the budget statement was much better than the State of the Nation address by President Mutharika.

The State of the Nation address was faulted not only in what it contained, but also in the glaring omissions.

The budget statement by Ken Kandondo touched on some of the economic challenges Malawi is going through for example forex and fuel shortages.

Unfortunately, solutions proposed to these challenges are mediocre.

For example, for the Minister of Finance to suggest that the forex problem will be solved by growing more cotton makes nonsense economically and shows lack of ideas in the DPP government.

As expected, the Minister expanded the tax revenue channels by imposing tax on bread and other daily consumables.

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