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Answers to economy lie within government
By
Our Reporter - 10-12-2002 |
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Finance and Economic Planning Minister Friday Jumbe unveiled a bold ambition on Tuesday, asserting that government intends to base its future budgets on available domestic resources because factoring in donor inflows has led to a number of problems as the support from the international well-wishers has not been coming in when expected.
The dream could have ordinarily been laudable because no prudent person or institution budgets on funds whose source is not certain. That is only being realistic. But leaving the matter there is missing the larger picture as it were.
The problems we are facing with the donors are self-inflicted and if we do not address the real cause — financial discipline — we will only be chasing shadows. If government will not consider donor money in financing its budget, it is only natural that it has to source the money locally.
That means borrowing heavily on the market and in the process crowding out the private sector through rising interest rates. The danger with that is that the private sector is government’s main source of revenue through tax because it does not get much from the public service where people get more tax-free allowances than taxable salaries.
Apart from the direct taxes that government collects there are levies which are paid to meet one cost or the other. There is fear that to squeeze the Malawian taxpayer even further might be counterproductive. Already the private sector is facing a number of problems that have led to several companies folding and, by extension, narrowing the county’s tax base.
It is even more painful that not all the money which government collects is put to good use. Government’s appetite for overexpenditure has become chronic and makes, once again, the cost-cutting measures Jumbe announced on Tuesday sensible. If only there was the political will to follow them to the letter!
But the sad reality is that the measures are not new and experience has shown that such measures are never enforced. Rather than blame the donors for delaying fund disbursement and setting conditionalities on their money, we need to look at our own contribution to the mess we find ourselves in.
Our seriousness to collect as much revenue as possible should be matched by the same level of seriousness to spend frugally regardless of whether the money is sourced locally or otherwise. |
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