this morning (Kinshasa Time: GMT+1), PM Augustin Matata Ponyo
presented his so-called "results-centered" $8.9b FY 2012 budget draft
bill.
A paltry 16% increase over the previous budget. Oh well, who said this
country is already out of the woods?
Up to now, the government has been dysfunctionally working in
quarterly-incremental budgets--the previous parliament having failed
to pass a budget for this year.
As a matter of fact, at the close of his presentation, PM Matata said
he'll be returning to the National Assembly to present the budget for
fiscal year 2013.
As of this writing, more than 200 MPs are lining up to debate the budget.
PM Matata started out, in the first constituent of his presentation,
with a baseline of the previous government's budget, which ended up
with more than $3b deficit.
Matata was, however, quite satisfied with the overall macroeconomic
perspectives, with the actual economic growth of 6.9% (compared with
the projected 6.8%).
One indicator was of some concern though: the rate of inflation stood
at 15.5% at the end of last year, sharply contrasting with the
projected 9.9%.
Matata attributed this inflationary flare-up and the budget deficit by
the price hikes caused by speculators when the Value Added Tax (VAT)
was introduced by the end of last year, the expenditures earmarked for
the Francophonie Summit, and the unanticipated security expenditures
in the restive Kivu provinces.
But Matata claimed that this situation will be brought under control
by a "pertinent targeting [of expenditures] for the remainder of the
year."
The second constituent of Matata's presentation was the recent
macroeconomic situation.
Matata claimed that two indicators were particularly positive and
stable: the external value of the Congolese currency and the price
rates of commodities and services.
He also said that the current inflation stands at 4.4%; and he
estimated that it'd be around 9% by this year's end.
Matata ended this section of his presentation by claiming that the
Central Bank of Congo (BCC) is now boasting $1.34b in foreign currency
reserves.
The third constituent of Matata's presentation consisted in giving the
overall perspective of the government's program and new budgetary
methodology.
Matata insisted that henceforth, there will always be a palpable link
between government stated policies and the budget. Hence, his
"results-centered" budgeting.
The government's global stated policy, Matata went on to say, was
Joseph Kabila's objective called "Modernity Revolution," which is
articulated along 6 major axes: institutional reforms, strengthening
of the macroeconomic performance, construction and repair of basic
infrastructures, reinforcement of capacities of human capital and
striving for new citizenship, and reinforcement of diplomacy.
In the last constituent of his presentation, Matata unpacked the
budget project itself.
Matata prefaced this section by reminding the plenary session that the
budget project took into account a few challenges lying ahead:
preparations of the organization of 2013 provincial and senatorial
elections; conclusion of negotiations with the IMF; and the National
Assembly's backlog of bills on public finances.
But Matata promised to meet his parts of the aforementioned challenges
through, once again, his methodology of "objectives-centered" approach
in budgeting.
Revisiting once more the country's macroeconomic situation, Matata
said that right now, the growth rate stands at 6% but might soar to
6.9% by this year's end; while the double-digit 12.7% rate of
inflation will be scaled down to 9.9 % at the end of the year.
Matata then unveiled the amount of the government's projected budget:
$8.9b--with $6b in internal revenues and $2.8b in external revenues
(bilateral and multilateral aid).
Matata claimed his government will mobilize the necessary internal
revenues by, among other things, strict limits on exonerations on
importations; the end of fuel subsidies; a crackdown across the board
on companies cheating on their taxes; rooting out sim boxes in mobile
telephony; an increase of taxes on investments to 30% (from the
current 22%); and revenues from taxes on mining and logging companies.
On the other hand, Matata's breakdown of expenditures is as follows:
1) Institutional reforms: 25.59%(decentralization, security sector,
human rights, gender and children, census, etc.).
In this section, the sum of $250m is earmarked for defense (ministry
and FARDC included), which is a joke, given the insurgency in eastern
DRC.
2) Macroeconomic stability: 25.19% (structural reforms, job creation
policy, stimulus to small and medium entreprises, microfinance,
telecommunications, tourism, etc.);
3) Infrastructures: 18.38% (roads, ports, airports and railroads,
river transport, etc.);
4) Social sector: 29% (healthcare, habitat, etc.);
5) Human capial and new citizenship : about 1%;
6) Diplomacy: about 1% or less.
Matata ended his presentation by reminding MPs, who, incidentally,
have only so far only passed one law in this legislature, that they
have a slew of financial bills to debate and pass into a law.
As I am posting this, Matata is weathering the storm of invectives
being thrown his way by opposition MPs among the more than 200 MPs who
are commenting on his proposed budget.
Matata is to return to the National Assembly in two or three days'
time to address the concerns raised by members of parliament.
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