CUT BUDGET BY 10% - GOVT

MBABANE – Cut the budget by 10 per cent.  This directive has been communicated to all ministries by government in light of the financial challenges which have rendered the State cash strapped.

Reliable sources confided that some government departments, especially within key ministries such as Health, Agriculture and Education, were in the ‘dark’ as to how the instruction would see the light of day given the fact that they still had to deliver essential services to the expected standards with a reduced budget.
“How does government expect us to deliver on our mandate to provide services at the best of our ability without adequate resources?”

argued a senior officer who further disclosed that they were currently collating their budget projections to be presented to the budget committee under the Ministry of Finance.

Minister of Finance Neal Rijkenberg, who is expected to deliver his maiden budget speech after the official opening of Parliament by His Majesty King Mswati III later next month, confirmed that they expected ministries to reduce their expenditure projections to cater for the financial shortfalls currently being experienced by government.

Projects

“There has been a call for ministries to cut their budgets by 10 per cent with a view to ensure that all projects that have been budgeted for are financed at ease,” explained Rijkenberg.

Independent calculations by this publication on the basis of the 2017/18 national budget presented by Former Finance Minister Martin Dlamini, whose total was E21.6 billion, unearthed that a reduction by up to 10 per cent would amount to approximately E2.16 billion. This effectively means incoming Minister of Finance Neal Rijkenberg’s maiden budget could be around E19.4 billion.

When asked to explain whether they were cognisant of the challenges faced by either ministries or government departments which provide essential services in reducing their budgets given some of the key projects they need to undertake during the 2019/20 financial year, Rijkenberg responded: “We are aware that some departments may encounter difficulties in reducing their budgets but we will consider whether a reasonable effort has been made to cut down on costs.”

Downsized

One of the key ministries which could be affected by the budget cut is that of Education and Training, whose budget was downsized in 2018. In 2017, the ministry had been allocated E3.5 billion which was reduced to E3.3 billion the following year. Should the 10 per cent budget cut see light of day this year, the ministry could be apportioned with a budget of E2.97 billion. 

Principal Secretary (PS) in the Ministry of Education and Training Dr Sibongile Mtshali also confirmed knowledge of the call to reduce their budget by up to 10 per cent but wondered how this would be possible given the tasks and challenges they currently face which require additional funding. She said should their budget be cut even further, they were likely not to be able to open more schools as expected and hire additional teachers to meet the shortfall of about 1 000 vacant teaching posts,.

“We are yet to appear before the budget committee where we will be advised on where to cut our budget but it will be really hard when taking into consideration the programmes and projects which need to be implemented,” said Mtshali.

Ministry of Agriculture PS Bongani Masuku also shared similar sentiments. He acknowledged that cutting their budget would definitely be a challenge when taking into account the fact that they needed to ensure food security and also make the agriculture sector to thrive.

“We are yet to negotiate the budget cut, obviously with a strong consideration of the financially challenging times faced by government,” Masuku disclosed.
It should be noted that an additional decrease of the Ministry of Agriculture’s budget allocation by 10 per cent from the E1.4 billion in 2018 to E1.26 billion in 2019 could be much against dictates of the 2003 Maputo Declaration of Comprehensive Africa Agriculture Development Programme (CAADP). CAADP is based on two overarching principles: the pursuit of six per cent average annual growth in the agricultural sector at national level; and, allocation of 10 per cent of national budgets to agriculture.

CAADP is the most ambitious and comprehensive agricultural reform effort ever undertaken in Africa as an initiative of the African Union (AU) and New Partnership for Africa’s Development (NEPAD) which represents a fundamental shift towards development that is fully owned and led by African governments. It reflects African governments’ recognition of agriculture as central for the alleviation of poverty and hunger.

An independent economist, who preferred anonymity, advised that cutting the budget by 10 per cent could ensure that government had sufficient funds available to be apportioned to the budgeted projects. “A realistic budget always helps to ensure that there are enough funds to cater for what has been budgeted for,” the economist advised.

Revenue

However, he stressed that it would be vital to ensure that key revenue generating projects did not get affected because this could lead to a further slowdown of the economy whose Gross Domestic Product (GDP) could well be over one per cent this year, according to the Central Bank of Eswatini (CBE).   
Business Eswatini President Andrew le Roux lauded government for deciding to slash the budget.

He said for the kingdom to achieve sustainable growth it would be important to ensure that expenditure patterns were monitored and restricted.
“This move will create more room to generate more revenue for the country in order to improve the country’s economy,” le Roux pointed out.   In 2018/19 revenue was expected to increase by two per cent to E16.7 billion excluding grants.

The increase, as stated in the budget, was attributed to policies expected to be implemented which included collection of licence fees from mobile companies and an increase in Value Added Tax (VAT) to 15 per cent, which was eventually implemented.

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