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Facing our realities - Malawi budget speech 2002/03

12. Expenditure control measures
  1. Mr. Speaker, Sir, Honourable Members, for the Budget I am presenting in this August House to be implemented, several measures will be introduced in the 2002/03 fiscal year. These measures are aimed at controlling expenditures, enhancing revenue generation and thus bringing the economy back on track. In order to ensure that ministries and departments remain within the approved allocations, expenditure control measures which applied in the 2001/2002 Budget will be maintained and the following additional measures will be introduced in the 2002/2003 fiscal year:

    1. The Ministry of Finance and Economic Planning will with immediate effect be submitting monthly expenditure reports to the Cabinet Committee on the Economy. Ministers and Controlling Officers whose ministries’ expenditures are out of line will be called before the Committee.

    2. Regular audits and cleaning of the payroll system will be conducted to institute financial accountability and transparency in Government. Within the first three months of 2002/2003, the Ministries of Education, Science and Technology; Agriculture and Irrigation; Health and Population; Lands, Valuation and Surveys; the National Roads Authority; and Housing will be fully audited. These institutions have been singled out because of their high financial outlays.

    3. To strengthen internal controls and stem some entrenched malpractices, staff rotation will be enhanced through the re-instatement of the Common Services.

    4. Cheque signatories, particularly in large ministries, will be reviewed and that Controlling Officers or their Deputies will be required to personally countersign all cheque payments in excess of an amount to be soon determined once a review of the payments system has been completed.

    5. The public sector will be streamlined in order to reduce costs. Among other things, Government will review the functions of some Government ministries and departments, and parastatals and merge and rationalise those that perform similar functions. In this regard, Government has already approved the merging of the Malawi Investment Promotion Agency (MIPA) with the Malawi Export Promotion Council (MEPC), and the Ministry responsible for Poverty Alleviation Progams in the National Economic Council with the Department of Disaster Preparedness, Relief and Rehabilitation to take advantage of economies of scale. The mergers will become effective beginning on July 1st, 2002.

    6. Government will ensure that commercial parastatals remit dividends to the Government at the end of the financial year in accordance with a dividend policy to be available. This measure comes because most parastatals have not been remitting dividends to Government even when they have made profits.

    7. Salary increments and adjustment of fees for Board Members as well as purchase of capital equipment shall be subject to approval by Treasury. This measure is proposed because it has been noted that most parastatals do not follow the provisions of Finance and Audit Act.

    8. Government will review subvented organizations and examine if their continued existence is justified. Moreover, subvented organizations will need to come up with ways of reducing their dependence on Government subvention.

    9. Proceeds from fuel levy will be deposited in a special account with Reserve Bank of Malawi. NRA should submit their requirements taking into account other levies that they collect including grants from donors. The levy will be used solely for its intended purpose but Government would like to see that the draw-down on the levy is consistent with the level of road maintenance and rehabilitation work and ensure transparency.

    10. Government will review sitting allowances for all Board members in parastatals to eradicate misuse and ensure homogeneity.

    11. Special audits will be conducted in some parastatals where existence of financial misuse and general mismanagement would expose Government and thus undermine efforts to bring about the required financial discipline in the entire public and parastatal sector.

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