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FINANCIAL WATCH:How to avoid a budgetary crunch
2006-03-01 07:06:32
By Mireny John
The government is now firmly in a budgetary fix. The current acute shortages of food and power have jointly thrown public finances into a shambles.
Instead of resorting to the traditional mini-budget option, the government seems determined to swap some of the ministerial appropriations in order to re-allocate them to emergency food purchases and power crisis alleviation schemes.
Until now, it is not clear which ministries will be directed to give up part of their previous appropriations endorsed by Parliament.
Yet, going by the truth of the day, the swapping exercise implies that some development projects planned before would be sacrificed in the name of food and power emergencies.
Last week, an additional dimension to the budget support crisis came about in the form of a compromise agreement between the International Monetary Fund (IMF) and the government on the expenditure direction of debt relief resources.
Over Tsh.300bn would be directed to the twin emergencies, until measurable recovery is seen to happen.
Debt relief comes about in phases, and it seems the normal financing route for pardoned debts would be restored when food production and power supply come back to normal.
One has to be extra careful in re-arranging the new direction of budget re-allocation, in order to avoid a probable crunch.
For instance, the diversion of the pardoned debts into the twin emergencies comes with a sacrifice, whose handling could prove to be both delicate and risky.
The previous concession about allocation of resources from debt amnesty was to support projects and other initiatives in the areas of HIV/Aids, agriculture, urban sanitation, education, health, rural water supply, as well as child immunization.
Someone has to be on the lookout to ensure that critical areas do not suffer from double swap as that may end-up in a total crunch.
In the worst scenario, if a budget cut is approved on education, a reprieve cannot be expected from the direction of debt pardon, because its expenditure upshot has already been decided by the recent agreement.
The diversion of debt relief cash into the emergencies will get the nation off the hook, but its implications equally demand refreshing our skills in handling priorities.
A budget crunch should be avoided at all costs.
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