Budget speech expectations

26 February 2010, The Swazi Observer
URL: http://www.observer.org.sz/index.php?news=11442

*  Economic growth and poverty alleviation: I expect the budget speech to focus on areas that are critical for economic growth and poverty alleviation. These areas are also components of the Poverty Reduction Strategy and Action Programme (PRSAP), they include but not limited to: Provision of safe water and sanitation, Access to health care, The fight against HIV and AIDS, Hunger and food security, Education and stimulation of Economic Growth.

* Budget deficit: The country’s budget deficit in 2008/9  amounted to 8% of the country’s Gross Domestic Product (GDP) which was rather high, unfortunately there isn’t much basis for thinking that the deficit might be otherwise this year. This time around one hopes that the minister’s speech will come out clearly on the sectors that are targeted at accelerating economic growth. 

*  Wage bill: In the past three national budget speeches, the minister indicated that the wage bill continues to increase; in fiscal year 2008/9 the wage bill stood at 52% of the recurrent budget. The honourable minister, in the last budget speech punctuated his presentation with the usual cliché: “there is an urgent need to contain the wage bill and ensure sustainability”. One can only hope this time around this expression will be followed by a clear indication on how this is to be undertaken. If government is to make progress in this area, it is important to set targets and embark on processes aimed at realisation of those targets.

* The Central Transport Administration (CTA):  The CTA continues to be a serious drain on public funds. In the last budget, the CTA accounted for 6% of total recurrent expenditures.  This entity has been a source of concern in most of the budget speeches, there appears to be no clear direction regarding the restructuring of this entity to curb losses. The gains from the recent changes in management of the CTA are yet to be ascertained. 

*  Domestic Capital Markets: It would  be encouraging if the minister’s speech would detail out government’s programme for strengthening local capital markets to serve as future financiers for government expenditure, this is rather critical in view of the dwindling Southern African Customs Union (SACU) receipts. Emphasis on this aspect of the economy would truly mean that government has embarked on “business unusual”. 

*  Self sufficiency in food production:  At the 2007 National Agriculture Summit stakeholders citied a number of problems which have and continue to hinder crop production. These include the shortage of water and the risks of reliance on rainfall and the very high and unaffordable costs of inputs. Most irrigation land is used to produce sugar cane instead of maize which exacerbates the food security problem.

One sector which has not gained much focus although it has potential for alleviation of the food security problem and increasing gains from trade is the fisheries sector. The fisheries industry is faced with the problems of having no policy to give direction on the vision for the sector; the law protecting fisheries resources is outdated. One hopes that in the national budget speech the government will express revived commitment to funding the fisheries sector. Currently this sector lacks the equipment for construction of fish ponds, harvesting equipment is expensive and there is a serious lack of inputs. Fish is an important source of protein; this industry could actually have a significant contribution in poverty alleviation. The absence of a formal market for fish has resulted in poor commercialisation of this sector; government has to strengthen efforts at establishment of markets for fisheries.

*  Diversification of the Export base: Programmes aimed at improving gains from commercial farming appear to be concentrated largely on sugar cane farming which in the past benefited from favourable world prices and preferential treatment in world markets. In this area the expectation is for the budget speech to highlight efforts aimed at diversification of the export base. Commercial farming should be given the necessary focus on food security and sustainable development. 

*  Highs and Lows: The speech should go beyond acknowledgment of the important role played by various entities in the fight against HIV and AIDS to actually provide indication of how government intends to improve the country’s absorptive capacity of resources from the Global Fund on AIDS, TB and Malaria.

* Social Sectors: Budget allocations to Health, Education and Agriculture sectors should not be subjected to the 14% cuts. Policy makers should be reminded that the Government of Swaziland (GOS) is signatory to the Abuja Declaration according to which governments are expected to allocate 15% of the national budget to the health sector. An important question in this regard relates to progress in attainment of this standard.

Whilst it is true that Tertiary Education takes up a large share of education spending which maybe inconsistent with practices in other economies, it is also equally true that Swaziland has not reached development levels that would allow individuals to acquire adequate finances to pay their way through tertiary education. It is important for government to strengthen measures to ensure commitment to repayment of funds loaned out to support tertiary education.

*  National Defence: Over the past three years, there appears to be increasing emphasis on national defence and security. In the past budget speeches this item, on average, accounted for approximately 5% of the national budget.   In my opinion this sector is somewhat overrated.

*  Perspective by Winnie Madonsela-Kalamandua, lecturer