It's Now Official: Zero-Deficit Budget No More | Malawi Voice

Written By: Malawi Voice on May 9, 2012.

Ken Lipenga

Malawi?s Finance Minister Ken Lipenga has finally announced that government will revert to the conventional national budget in the 2012-2013 National Budget.

The late President Bingu wa Mutharika administration introduced the Zero-Deficit Budget (ZDB) after the donor community freeze budgetary support to Malawi.

?The Zero-Deficit Budget was the idea of the previous government which unfortunately did not achieve its intended purpose. This coming fiscal year we have a number of partners who are willing to assist us,? said Lipenga.

The Zero Deficit Budget (ZDB) concept is a financial strategy laid out by the then Finance Minister Ken Kandodo under the late President Bingu wa Mutharika,that is was aimed at making Malawi an economic independent country.

This was a new approach to economic financial budgeting for a ?Least Developed Country? where the government aimed to finance all the recurrent expenditures using its own domestic resources.

This included that Malawi should be able to pay the salaries for the teachers,police, medicine ?for example a thing which Malawi has been relying on the donors for decades.

Kandodo mentioned that the ZDB is based on several consultations and studies; he did not cite any country on which he will model the zero-deficit budget approach nor a successfully executed Zero Deficit budget.

The Economics Association of Malawi (Ecama) noted that although the budget is based on four important cornerstones: ?global economic outlook; MGDS priorities; fiscal discipline with clearly spelt expenditure controls; and budget reform measures of zero-budget, Medium Term Expenditure Framework , and prioritising allocation of resources towards revenue generating areas? it also a calculated financial risk.

While the Malawi Knowledge Network (MAKNET) said the budget statement highlights milestones that Malawi has achieved such as unprecedented economic growth rates, single rate inflation, reduced bank rate and a stable Malawi Kwacha. It also highlights advancement in terms of food security, HIV/AIDS, maternal and infant mortality and infrastructure development.

Former finance Friday Jumbe noted that ?the concept in itself is not bad, but that the move seems to be reactionary to potential donor freeze.? He also noted that social sectors like education and health will be the most affected by these austerity measures.

The budget has left financial analysts wondering how government will ?eliminate deficits in one part of the budget (recurrent), but leave the other (development) unbalanced and still call the whole plan deficit-free?. Opposition parties argue that the budget will hurt ordinary Malawians and stifle the private sector since it also imposes tax increases on ordinary goods.

However Mutharika said many people did not understand the concept and their comments were unwarranted, in which ever way Mutharika?s dream to make Malawi an economic independent country has been has also been ?buried.

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