Budget offers no solution on forex and fuel - says Chambers of Commerce
The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) have said the 2011/12 financial budget has offered little or no solutions to major problems affecting industry in the country, especially challenges of foreign currency and fuel supply.
MCCCI Chief Executive Chancellor Kaferapanjira said while Finance Minister Ken Kandodo conceded that the economy is besieged by foreign exchange and fuel shortages, erratic supply of electricity, and an extraordinarily poor tobacco marketing season, he provided no solutions to the same.
“The private sector expected government to be pragmatic and submit to the substantiated requirements of the International Monetary Fund (IMF) that the local currency’s exchange rate be flexed,” said Kaferapanjira.
He said industry also wants the Reserve Bank of Malawi to move out of the direct buying of foreign exchange from the Tobacco Auction Floors.
Kaferapanira said the zero deficit budget is not going to be “a magic potion” to the challenges facing the economy because the domestic resources it will rely on will be in the local currency.
“The Kwacha cannot be used to import government’s necessities such as vehicles and stationery,” said Kaferapanjira.
He said from the K304 billion budget, recurrent expenditure has been increased to K234 billion while development expenditure has actually gone down by K8 billion to K69 billion.
“Despite the Minister of Finance touting the budget as a pro-development budget, and not a consumption budget, his figures tell it all that he has indeed practised resource cannibalism by shifting resources from development expenditure to recurrent expenditure. This is a clear reflection of the government’s values – short-termism,” he said.
He said if a country’s balance of expenditure is in favour of consumption, competitiveness of a country is sacrificed.
“The infrastructure and utilities that are crucially necessary for the growth of the economy are postponed. In turn this slows industrialisation, which is the only sure way of growing the economy sustainably,” he said.
Kaferapanjira said the budget is “very destructive” to the attainment of the very objectives the policy makers would want this economy to achieve, including achieving a production and export oriented economy.
He called on parliamentarians to critically scrutinise the budget and suggest changes to provisions that works against the development of the country and their constituencies.