Parliament takes break to scrutinise budget
THE national assembly has gone on a 10-day recess to give the parliamentary portfolio committees time to scrutinise the 2020/2021 budget estimates that were proposed by the Finance Minister Moeketsi Majoro in parliament on 26 February 2020.
The parliamentary committees have to scrutinise Dr Majoro’s budget estimates before the budget can be approved by parliament ahead of the start of the 2020/21 financial year on 1 April 2020.
Ahead of the announcement of the 10-day recess on Friday, the leader of the house, Deputy Prime Minister Monyane Moleleki urged the parliamentary committees to diligently study budget proposals before their approval to ensure they would enable the government to implement programmes that benefit the nation.
“The primary job of parliaments is to approve budget allocations for governments to successfully deliver services to the people,” Mr Moleleki said.
“So, it is imperative that in the next 10 days, honourable members put all their energies to examine the budget estimations and make sure that the monies are used for what they are intended to,” added Mr Moleleki.
On the 26 February 2020, Dr Majoro presented a static M21, 9 billion budget which reiterated his previous calls for a reduction in government expenditure to save money to fund investment and job creation initiatives.
Dr Majoro, who presented the budget speech amid opposition calls to have it deferred until outgoing Prime Minister Thomas Thabane’s successor has been inaugurated, said the country’s economy was not out of the woods yet and government had to reduce its spending.
Despite this, the minister relaxed the purse strings to propose five percent across the board salary increments for restive civil servants who did not get any increments in the 2019/20 fiscal year.
The increments should provide some measure of relief to the civil servants including teachers, police officers and magistrates who paralysed service delivery with their unprecedented wave of strikes in 2019.
There was also a modest M50 increase in the old age pensions from M750 to M800 for each pensioner per month.
Dr Majoro also proposed to increase the minimum taxable income from M5, 090 per month to M5, 350 per month.
M15, 7 billion out of the M21, 9 billion budget is for recurrent expenditure while the remaining M6, 3 billion is for capital expenditure.
Last year, Dr Majoro presented an M18, 1 billion budget for the 2019/20 financial year.
The 2020/21 budget will be financed as follows: M7, 9 billion from tax revenues, M1, 1 billion from grants, M2, 1 billion from non-tax revenues and M8, 9 billion from Lesotho’s share of the Southern African Customs Union (SACU) revenues. There is a M1, 9 billion deficit which Dr Majoro did not explain how it will be covered.
“The 2020/21 budget is presented within a challenging domestic and external environment,” Dr Majoro said.
“Our determination to stimulate our economy towards economic growth and human development and achieve fiscal sustainability requires sacrifice from all of us.
“We will have to address in earnest and due urgency the political instability that threatens to destabilise government and the already battered economy.
“It is thus critical that the entire Lesotho political leadership can pause for a moment and seriously consider putting this country and its people ahead of personal interests. Basotho have suffered enough and would like to live in a country that is at peace with itself,” he said in what was largely an echo of his previous budget speeches.
Dr Majoro said the economy had shown strong resilience despite the challenging economic and fiscal conditions the governing coalition government inherited when it took over from the previous Pakalitha Mosisili-led government in June 2017.
“For the past three years, this administration has been leading an effort to rebuild our economy…On many occasions where our country has been under distress, it has demonstrated overwhelming resilience.
“When we took office in June 2017, we inherited a financial and economic crisis characterised by depleted international reserves and slow structural growth.
“At the time, we assumed that the problem was merely cyclical and would soon disappear, but it has persisted and now we fully comprehend that our woes emanate in part from factors we have no control over.
“Persistent economic slowdown in South Africa, slow growth of our exports and volatility of SACU revenues—none of which Lesotho has control over—have negatively impacted our economy. The domestic and external reserves cushion—which Lesotho has control over were already depleted in 2017, and thus provided little policy cover to absorb the external shocks.
“The mandate of this coalition government remains clear; to provide the citizens with an honest, clean, transparent and effective administration; revitalise an economy after several years of economic stagnation; implement an innovative approach to accelerating investment and job creation; and repair the fiscal accounts which were seriously damaged by wasteful expenditure. We were also mandated by the people to regenerate confidence and trust in the management of the country’s fiscus.”
Despite the five percent salary increments for civil servants, they and the rest of the population could see their real disposable incomes eroded after Dr Majoro revealed that there would be a three percent levy on mobile communications and a one percent levy on electricity.
The Finance minister also revealed that the government was working towards the implementation of 15 percent and 30 percent levies on alcohol and tobacco products which had been proposed in the 2019/20 fiscal year.
“In an endeavor to enhance government revenue, the following bills have been tabled before the National Assembly: the Tax Administration Bill, VAT Bill, Income Tax Bill and the Customs Bill.
“Furthermore, the oil levy has been revised from 80 Lisente to 110 Lisente for the period 2019/20. Mr Speaker, the bill on the introduction of 15 percent and 30 percent levies on alcohol and tobacco products is also in its final stages of preparation for tabling before parliament.”
He said his ministry had appointed the Public Procurement Tribunal to addresses grievances from unsuccessful bidders for government tenders “in a timely and less costly manner, compared to the traditional court system thus leading to faster resolution of procurement disputes”.
“This will also aid in creating transparency and accountability, thus creating a favourable environment for efficient private sector participation in the economy.”
The Finance minister said that government would no longer be settling loans for members of parliament as it had done in previous years.
Legislators qualify for M500 000 interest-free loans from banks as part of their benefits and they are supposed to repay the money over five years. The government underwrites the loans and has previously also paid interest on behalf of the MPs. Government has also previously paid off the loans for MPs when their terms prematurely collapsed due to political instability.
However, Dr Majoro said such payments on behalf of the legislators are now a thing of the past.