Malawian civil society has welcomed tax reforms and subsidies for agricultural inputs in the 2005/06 budget that will ease the burden of small-scale farmers plagued by poor harvests again this year.
Unveiling the budget on Friday last week, Finance Minister Goodall Gondwe described the reforms as an attempt to “improve the economic buying power of individual Malawians”, and said those earning less than $40 a month would not be taxed.
The government has also allocated $18-million for fertiliser subsidies and about $14-million to the Public Works Programme.
“The increase of the tax-free income means that the majority of smallholder farmers will be exempt from taxes,” said Gondwe.
Collins Magalasi, national coordinator of the Malawi Economic Justice Network, a group of NGOs that monitor the budget, said most of its suggestions had been taken on board.
“What we are now looking for is the implementation; as civil society, we want government to implement what it has set in the budget,” said Magalasi.
Gondwe also announced that about $45-million would be spent on procuring and distributing maize: the government is to buy 300 000 tonnes of maize, 250 000 tonnes of which would be distributed and the rest sold at a subsidised price.
A prolonged dry spell and inadequate inputs has affected harvests in the main maize-growing areas in south and central Malawi.
“… the disappointing harvest has necessitated that the importation of maize should once again be a major element of the budget. This is the largest amount that has ever been imported, and reflects government’s view of the intensity of maize shortage,” Gondwe told parliament.
According to the Malawi Vulnerability Assessment Committee, a production shortfall of over 600 000 tonnes, a strategic grain reserve of 15 000 tonnes and imports (including informal cross-border trade) of 104 000 tonnes, meant the country could face an overall cereal shortage of 482 000 tonnes. Food aid of 271 000 tonnes is expected to bring this down to 210 000 tonnes.
Gondwe said the British Department for International Development and the European Union would co-fund the importation and distribution of maize in the northern and central regions, while the local Malawi Nation daily newspaper quoted him as saying that the World Bank and the International Monetary Fund had also pledged financial support.
Parliament heard that free food, procured from South Africa, was already being distributed in some areas, while the World Food Programme was providing food in parts of southern Malawi.
Gondwe said government had organised a Public Works Programme in every district to give families opportunities to earn money, which would in turn be used to buy subsidised fertiliser.
The Expanded Targeted Input Programme, launched last year to ensure that poor households had access to small quantities of free seed and fertiliser, would be replaced by the public works programme and the subsidy scheme.
Earlier this year Gondwe said Malawi could move out of poverty only if its economy grew by six percent a year — in 2005 the economy had grown by just under three percent because of the long dry spell.
Rafiq Hajat, executive director of the Institute for Policy Interaction, described the budget as “very promising … food security is vital for Malawi … but what remains now is the implementation”. – Irin