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| National |
| UDF, MCP to reject financial year change |
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by
Emmanuel Muwamba and Tadala Makata-Kakwesa, 20 April 2007
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05:47:08
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The Malawi Congress Party (MCP) and the United Democratic Front (UDF) have made it crystal clear they will not support government’s intention to change the country’s financial year.
Government recently announced it wants to change the financial year from the July 1-June 30 period to the January 1-December 31 timeframe. The authorities said the change would help ensure smooth planning.
But Minister of Finance Goodall Gondwe on Thursday said he was not aware of the development from the opposition. He said the MCP and UDF did not object to the proposed change when the issue was brought to Parliament.
In a press statement issued on Tuesday, UDF said as a result of its intention to change the fiscal year, government is planning to take advantage of the June budget session to table only six months of the national budget—from July 1 to December 31.
“The UDF wishes to advise government well in advance that it will not support such a change both in and outside Parliament. Change for the sake of change is unacceptable to the UDF,” reads the statement.
The party argues May is the month of national presidential and parliamentary elections in the country after which a new government has two months to make its own national budget, effective July 1, in accordance with its priorities.
“It is totally unreasonable for anyone to expect a newly-elected government to be saddled with a national budget of the ‘defeated government’ any longer than three months,” says the statement, signed by spokesperson Sam Mpasu.
UDF further argues the July-June financial year should be maintained because Malawi, being a country whose economy depends on agriculture, is better served by this timeframe because the harvest and produce-marketing season coincide with the month of May.
The party also says the auction floors for tobacco, the country’s premier cash crop and foreign exchange earner, open as early as April and by June, government has a reasonable estimate of revenues.
“Since a national budget depends largely on government estimate of revenues on which national expenditure depends and subsequent taxation or borrowing levels to cover shortfalls or surpluses are fixed, it is absolutely critical that such revenue estimates be as accurate as possible,” reads the statement, arguing the proposed calendar will make no sense of any revenue estimates.
MCP spokesperson on parliamentary matters Ishmael Chafukira said their party questions the reasons behind the proposed change.
“We will not support that until valid reasons are given sufficiently,” he said.
However, Gondwe said the change is necessary because it will allow early planning like in the purchase of fertiliser subsidy.
“It will give us about nine months and we feel that is adequate time,” he said, noting that most Sadc countries have similar fiscal calendars.
Gondwe said the Budget and Finance Committee of Parliament also agreed with the proposal.
“Maybe, they [UDF and MCP] have their own reasons for that [rejecting the calendar change],” said Gondwe.
Society of Accountants in Malawi (Socam) president Andy Kulugomba in March spoke in support of the current fiscal year, saying it makes planning much easier than the proposed one.
University of Malawi economic professor Ben Kalua said the success of the proposed arrangement would depend on how prepared other players are to grasp the idea since government is not the only player in the economy.
Meanwhile, Gondwe has said he will this year table two national budgets in Parliament—one in July and another in November—following government’s decision to change the financial year.
Gondwe disclosed this during a pre-budget consultative meeting with the private sector in Lilongwe yesterday.
He said Parliament will first discuss a six month budget estimated at K83 billion covering the period July-December 2007 before debating the main budget for the January-December 2008 fiscal year expected to be tabled in November.
Gondwe said the K83 billion was arrived at after calculating how much government would have spent in the next financial year using the June-July calendar.
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