Accounting and auditing firm, PwC, is cautioning the government against celebrating the revival of the economy dubbed ‘turning the corner”.
In its overall perspective on the 2024 budget, it said there is still quite some distance from the finish line.
According to PwC, the next lap could be the hardest section yet to run.
“At PwC, we accept that we might be turning the corner. However, it is our view that we are still quite some distance from the finish line. The next lap could be the hardest section yet to run”.
However, it said the 2024 Budget contains some socio-economic development programmes such as planned new investments into the Planting for Food and Jobs Phase II (PFJ 2.02) that if implemented properly could deliver desired results “example stronger, more competitive local businesses in selected critical agricultural value chains, jobs, and reduced import bill”.
It expressed worry about the 2024 election spending, saying, there are significant threats to disciplined budgetary execution that the government would have to face off to stay on track to achieve the broad medium-term targets of recovery, stability, and growth.
“Our advice to government (for instance, in the PFJ 2.0 example mentioned above) is to adopt sound project selection and implementation approaches that will lead to producing commercial-scale models/ pilots that would serve as effective anchors for driving the sector-wide transformation envisaged for the priority sectors listed in the medium-term growth strategy”.
“Specifically, we urge Government to avoid the temptation to be overly generous in its application of “social protection and poverty reduction principles” during the 14-month first phase of the five-year Growth Strategy. Such social protection principles are likely to have populist appeal but would simply dissipate scarce financial resources in arrangements where project beneficiaries consider them as “handouts” and do not have sufficient incentive to generate results that could be self-sustaining and eventually grow to support an ever increasing number of beneficiaries”, it added.
The auditing firm continued that the 2024 Budget arguably contains some ambitious target such as the total revenue and grants target of ¢176.4 billion (16.8% of an approximately ¢1 trillion GDP economy) and a primary balance (on commitment basis) of 0.5% of GDP sound steep!
“Despite being ambitious, we believe the 2024 Budget contains tangible promise. But to realise that promise, government needs to be innovative, have discipline, consult widely and sincerely, and be transparent and accountable in its dealings with its stakeholders. The Public Financial Management (PFM) reforms will be a critical piece in the efforts to achieve such effectiveness in budget execution”, it stated.
It encouraged the government to implement these reforms “full-spec”, saying it would be happy to contribute its knowledge and experience in this area in support of the Ministry of Finance as it seeks to properly execute the PFM reforms agenda fully.
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