Pre-budget seminar should tackle root causes of economic problems

 

Members of Parliament are currently gathered in the resort town of Victoria Falls for the traditional pre-budget seminar.
IN THE HOUSE WITH JOHN MAKAMURE
The annual seminar brings together ministers, senior government officials and all members of the National Assembly and Senate to dialogue on national priorities that should be funded from the fiscus.
The pre-budget seminar is a welcome event as it provides a platform for the Executive to solicit the input of lawmakers during the formulation of the National Budget. The 2015 National Budget is currently being crafted and should be presented to Parliament for debate and approval late November or early December as has been the practice. The discussion and resolutions of the seminar should therefore influence the content of the budget provided they are taken on board.
While the Finance ministry and Parliament must be applauded for organising the pre-budget seminar, my main concern is to do with timing. The pre-budget seminar is conducted very late into the process of budget formulation. By this time the Ministry of Finance would have finalised the Budget Framework, while line ministries would have concluded their discussions with Treasury on their bids for the next financial year.
My view is that any room for flexibility is very limited even if the pre-budget seminar comes up with sound resolutions. In future, the authorities should consider convening the pre-budget seminar around June when budget consultations between the Finance ministry and line ministries begin in earnest.
The other important issue I would like to point out is that MPs and ministers must tackle the root causes of our economic problems if this pre-budget seminar is going to be of any value. For the discussions to focus on this and that requiring funding is meaningless in a situation of severely constrained fiscal space.
The cake is very small and continues to shrink thereby making budgeting an academic exercise intended to meet statutory requirements.
Evidence of a shrinking cake include the drastic revision in projected gross domestic product growth rate in 2014 from 6,1% to 3,1%, ballooning domestic and foreign debt to over $10 billion, falling capacity utilisation in the manufacturing sector to about 36%, rising civil service employment costs to more than 76 % of the total budget, widening trade deficit as imports soar, just to name a few indicators.
Rather, the discussions should centre on how to grow the cake. One of the prerequisites for growing the cake is improved confidence among economic agents. This confidence comes about due to sound economic policies, consistency in implementing the policies and stability in the political climate. You may as well kiss goodbye to any prospects for attracting substantial inflows of foreign direct investment (FDI) the moment investors perceive that the government is not sincere in its economic pronouncements and that the political future is uncertain.
The statistics speak for themselves. Foreign direct investment inflows were a mere $400 million in 2013, according to a United Nations Conference on Trade and Development Report. Such low levels of FDI cannot spur economic growth.
It is a good development that we have signed some mega infrastructure deals with China and Russia, and that we recently received an investment mission from the United Kingdom. However, all these are initial stages in any investment decision. What has been achieved so far can only translate into actual investments on the ground provided our political leaders speak with one voice, and that some of the policies and laws that scare away investors are repealed or amended.
The seminar should also set aside time to seriously discuss the issue of budget implementation and the role that Parliament should play in light of the new Constitution.
Section 299 of the Constitution has mandated Parliament to monitor and oversee expenditure by the State and all commissions and institutions and agencies of government at every level in order to ensure that all revenue is accounted for, all expenditure has been properly incurred and any limits and conditions on appropriations have been observed.
This is a very good constitutional provision on paper. Implementing the provision in practice has proved very difficult. The seminar must therefore come up with a resolution on how to enforce this constitutional provision. This is particularly important in light of the perennial Auditor-General findings of gross abuse and theft of public funds and assets.
The portfolio committees of Parliament are empowered by the Public Finance Management Act to monitor budget implementation through the submission of monthly and quarterly budget performance reports by line ministries. Again these provisions are not being complied with.
The MPs and the ministers must honestly discuss this matter and address the reasons why the provisions are being violated with impunity.
I would describe the pre-budget seminar as a huge success if these pertinent matters are debated and solutions arrived at.
lJohn Makamure is the Executive Director of the Southern African Parliamentary Support Trust. Feedback: john.makamure@gmail.com

 
 
 

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