Zero deficit budget
Encyclopedia
The Zero Deficit Budget is a financial strategy laid out by Minister of Finance Ken Kandodo
of Malawi
under the Bingu wa Mutharika
administration that is based on zero-based budgeting. This is a new approach to economic financial budgeting for a a 'Least Developed Country' where the government aims to finance all the recurrent expenditures using its own domestic resources. Kandodo mentioned that this new 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.
Economics Association of Malawi notes 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.
According to the Malawi Knowledge Network (MAKNET), 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 highlighter advancement in terms of food security, HIV/AIDS, maternal and infant mortality and infrastructure development.
Features:
Former finance minister of Malawi 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.
Opposition parties argue that the budget will hurt ordinary Malawians and stifle the private sector since it also imposes tax increases on ordinary goods.
Ken Kandodo
Ken Kandodo is a Financial Manager, MP and politician who was appointed Malawi's Minister of Finance on June 15, 2009.. As of September 8th 2011, he is no longer finance Minister in Malawi due to the reshuffle in the Cabinet of Malawi....
of Malawi
Malawi
The Republic of Malawi is a landlocked country in southeast Africa that was formerly known as Nyasaland. It is bordered by Zambia to the northwest, Tanzania to the northeast, and Mozambique on the east, south and west. The country is separated from Tanzania and Mozambique by Lake Malawi. Its size...
under the Bingu wa Mutharika
Bingu wa Mutharika
Bingu wa Mutharika is a Malawi economist who is President of Malawi. He took office on 24 May 2004 after winning a disputed presidential election...
administration that is based on zero-based budgeting. This is a new approach to economic financial budgeting for a a 'Least Developed Country' where the government aims to finance all the recurrent expenditures using its own domestic resources. Kandodo mentioned that this new 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.
Economics Association of Malawi notes 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.
According to the Malawi Knowledge Network (MAKNET), 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 highlighter advancement in terms of food security, HIV/AIDS, maternal and infant mortality and infrastructure development.
Features:
- Finance all public recurrent expenditure using its own domestic resources without any recourse to either domestic or foreign borrowing or cuts in public service delivery.
- Projects will be mobilized unless resources backing up those expenditures have been received
- Import duty on photocopier machines, cigars and other tobacco substitutes have gone up by more than 100%.
- limits on goods allowed from export processing zones (EPZs)
- Allocation to support the education sector received the bulk of the budget followed by the agriculture and food security sector.
Former finance minister of Malawi 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.
Critics
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.