Recently, it was reported in the media that government has to raise an extra an additional MK13 billion on top of the initial budget of MK40 billion for Farm Input Subsidy Programme (FISP) following the depreciation of the local currency the Kwacha against the US Dollar, a development which is exerting pressure on the National Budget.
In May this year parliament passed the 2015/16 National budget of MK40 billion for the FISP translated to US$95.2 million at the exchange rate of MK420 rate to a dollar.
Currently the Kwacha is trading at about MK560 to the Dollar and the FISP budget has now eroded to about $71.4 million representing a drop of $23.8 million in dollar terms, a development which the Minister of Agriculture, Irrigation and Water Development Allan Chiyembekedza has admitted that it has a bearing on the FISP’s MK40,000,000 budget.
500,000 beneficiaries will have to be removed from the estimated 1.5million beneficiaries if Finance Minister Goodall Gondwe maintains that government will stick to the MK40 billion FISP allocation. The Chairperson for the Parliamentary Committee on Agriculture Felix Jumbe has bemoaned that this development spells a major disaster for the poor in the country.
Already about 2.8 million people are facing hunger following the floods that affected fifteen districts in the country and government has imported maize from Zambia to address the problem.
Economics Professor at the main constituent college of the University of Malawi Chancellor College, Ben Kaluwa said that sticking to the MK40 billion budget may result in reduction of beneficiaries because the Kwacha would have lost value.
Malawi relies on FISP to guarantee food security for its citizens but with the current hunger facing the country, government must come up with a clear position on this matter before the rain season starts.
According to the reports in one of the local newspapers, the Agriculture Minister confirmed that the MK40 billion may not be enough due to the fluctuation of the kwacha but said government is already working on a plan (to address the shortfall) and that no one should panic.
Beneficiaries of 2015 FISP will have to dig deeper in their pockets as they are expected to contribute MK8,500 for both seed and fertilizer inputs from MK 500 last year and government has removed some vulnerable groups of beneficiaries in this year’s programme.