‘Bud­get al­lo­ca­tion more of the same’

Lesotho Times - - News - Staff Writer

THE par­lia­men­tary port­fo­lio com­mit­tee on the Eco­nomic and De­vel­op­ment clus­ter has called on the govern­ment to stop em­ploy­ing a tem­plate ap­proach to the bud­get process to avoid re­peat­ing in­ef­fec­tual poli­cies.

In its re­view of the bud­get ti­tled “Con­sol­i­dated Re­port on the An­nual Bud­get and Es­ti­mates of rev­enues and Ex­pen­di­ture for the Fi­nan­cial Year 2016/17”, the port­fo­lio com­mit­tee calls on the govern­ment to be “more cre­ative” by mov­ing away from the well-worn themes of poverty re­duc­tion, re­duc­ing un­em­ploy­ment, pro­mot­ing democ­racy among oth­ers.

Fi­nance Min­is­ter Dr ‘Mam­phono Khaketla pre­sented the M17.423 bil­lion bud­get on 19 Fe­bru­ary 2016, amid dwin­dling South­ern African Cus­toms Union (SACU) rev­enue and a slow­down in the South African econ­omy.

The min­is­ter pro­posed a re­cur­rent ex­pen­di­ture com­po­nent of M12.359 bil­lion and cap­i­tal bud­get com­po­nent of M5.064.7 bil­lion.

The pro­jected rev­enue col­lec­tion was es­ti­mated to be M15.473.8 bil­lion, re­sult­ing in a deficit of about 9.9 per­cent of the GDP to be fi­nanced by draw­ing down on the re­serves and do­mes­tic bor­row­ing.

While ap­prov­ing the bud­get with a num­ber of amend­ments, the com­mit­tee says the ex­pen­di­ture plan was the “same old story” as yes­ter­year ver­sions.

“The 2016/17 bud­get re­flects the same old story of (a) lais­sez-faire at­ti­tude to bud­get­ing. One of the eco­nomic ex­perts con­sulted by the com­mit­tee said ‘it lacks cre­ativ­ity’ and ‘em­ployed a tem­plate ap­proach to the bud­get pro­cesses,” states the com­mit­tee.

“They are all the same . . . (and) about the de­clin­ing SACU rev­enues, the need to mo­bilise do­mes­tic rev­enues, an in­creas­ing and bal­loon­ing wage bill, a highly politi­cised pub­lic ser­vice, low ab­sorp­tive ca­pac­ity with re­gard to the cap­i­tal bud­get, the need to strengthen democ­racy; the story con­tin­ues.

“The 2016/17 bud­get is the same. The com­mit­tee feels this is the time to make a sig­nif­i­cant de­par­ture from the past.”

The leg­is­la­tors rec­om­mend the govern­ment to re­duce re­cur­rent ex­pen­di­ture and de­velop a rev­enue col­lec­tion strat­egy to main­tain fis­cal bal­ance.

“The bud­get deficit of 9.9 per­cent of GDP (gross do­mes­tic prod­uct) is not sus­tain­able. It is way out­side the rec­om­mended three per­cent of GDP.

“This means the coun­try is liv­ing be­yond its means and will soon be a failed state,” the com­mit­tee said.

On the is­sue of travel and trans­port, the com­mit­tee rec­om­mends all govern­ment de­part­ments to limit in­ter­na­tional trips, “ex­cept for those that Le­sotho has in­ter­na­tional obli­ga­tion to at­tend”.

It also urges govern­ment to de­fer all new pur­chases of non-fi­nan­cial as­sets and fur­ni­ture as well as curb­ing the use of cell phones “which are in­creas­ingly be­com­ing a sig­nif­i­cant driver of costs”.

The Le­sotho Rev­enue Au­thor­ity’s purview, the port­fo­lio com­mit­tee says, should be ex- tended to in­clude the col­lec­tion of non-tax rev­enue; the pay­ment of ser­vices and fees.

“It is im­por­tant for the govern­ment to fo­cus on im­prov­ing the col­lec­tion of non-tax rev­enue, es­pe­cially at the point of col­lec­tion. The in­ef­fi­cien­cies as­so­ci­ated with th­ese rev­enues at present have a se­ri­ous neg­a­tive im­pact on the pri­vate sec­tor and its op­er­a­tions,” it notes.

“The lim­ited fo­cus and re­liance on VAT (Value Added Tax), in­come tax and com­pany tax have lim­its, and with time may be re­gres­sive taxes. The govern­ment must strike a bal­ance lest it kills the goose that lays golden eggs.

“Al­most all the min­istries are far short of reach­ing the tar­gets be­cause the fig­ures have no ba­sis and that, in turn, mis­in­forms the bud­get.”

On pub­lic sec­tor re­form, the com­mit­tee says the govern­ment should press on “swiftly and pur­pose­fully” with fixed time frames for com­ple­tion.

“The pub­lic fi­nan­cial man­age­ment, the up­grad­ing of pay­rolls and hu­man re­sources in­for­ma­tion sys­tems and the pub­lic sec­tor mod­erni­sa­tion projects must all be pur­sued with earnest this fi­nan­cial year,” it says.

“It is fur­ther pro­posed that the govern­ment con­sid­ers out­sourc­ing some of its ser­vices in or­der to re­duce the wage bill.”

To foster the de­vel­op­ment of the pri­vate sec­tor, the Mem­bers of Par­lia­ment tell the govern­ment: “Put your money where your mouth is.

“It (pri­vate sec­tor) is the only so­lu­tion and op­tion avail­able to Le­sotho (for) gen­er­at­ing em­ploy­ment and re­liev­ing the govern­ment of its huge wage bill, (as well as) guar­an­tee­ing a re­li­able and def­i­nite rev­enue base.”

The com­mit­tee adds: “It is pro­posed that the govern­ment con­sid­ers es­tab­lish­ing a De­vel­op­ment Bank, a Prop­erty/hous­ing Bank and at­tract­ing more banks into the coun­try to off­set the ex­ist­ing mo­nop­oly by pre­dom­i­nantly for­eign banks in the fi­nan­cial sec­tor.

“It is (also) pro­posed that the Pub­lic Fi­nan­cial Man­age­ment and Ac­count­abil­ity Act be amended to ac­com­mo­date Par­lia­ment to par­tic­i­pate in the bud­get process at an early stage. Ideally, that could be at the point of Bud­get Frame­work pa­per dis­cus­sions.”

Among the pro­pos­als Dr Khaketla made in her bud­get speech was to in­tro­duce per­son­alised ve­hi­cle num­ber plates, in­crease fees on driv­ers’ li­cences, reg­is­tra­tion of ve­hi­cles and ring-fenc­ing part of the roy­al­ties from min­ing and wa­ter for cap­i­tal de­vel­op­ment.

In their re­view, the com­mit­tee notes: “It is doubt­ful whether the Min­istry of Pub­lic Works and Trans­port, which is re­spon­si­ble for ve­hi­cle num­ber plates, is­suance of driv­ers’ li­censes and ve­hi­cle reg­is­tra­tion is ready to im­ple­ment the pro­posal by the min­is­ter given the amount of back­logs and short­falls that ex­ist in the min­istry at this point in time.

“Ring fenc­ing part of the roy­al­ties from min­ing and wa­ter rev­enues in the strict sense of mo­bil­is­ing rev­enue does not fit the def­i­ni­tion but it is rather ear­mark­ing the al­ready ex­ist­ing re­sources for a par­tic­u­lar pur­pose.”

Fi­nance Min­is­ter Dr ‘Mam­phono Khaketla.

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