MLS questions legality of Government expenditure on COVID-19

By Duncan Mlanjira

In its evaluation of a number of instructions and measures which Malawi Government has made in containing the Coronavirus (COVID-19) pandemic, Malawi Law Society (MLS) contends that some of these have far reaching implications since they involve the Legislature.

In its Legal Guidance Paper on Management of COVID-19 Disaster, MLS notes that President Peter Mutharika instructed some withdrawal of funds from the Treasury but these announcements or instructions do not amend section 173 of the Constitution which prohibits drawing funds out of the Consolidated Fund without Parliamentary appropriation. 

“His pronouncements or instructions do not amend section 23 of the Public Finance Management Act which requires that an expenditure must be tied to an outcome or an output of the government Ministry, Department, or Agency as approved by Parliament,” says the paper.

“On 20th March, 2020 the President announced that there was a fund established for the declared state of disaster at K15 billion. The 2019-2020 financial year budget underwent Mid-Year budget review in February 2020. 

“It is not known whether the Minister of Finance tabled any supplementary budget for K15 billion to disaster management. The requirement of law is that such expenditure be done or endorsed by the National Disaster Preparedness and Relief Committee of Malawi. 

“If it was then a request (not instruction) for these funds would have to be made by the Commissioner of Disaster Preparedness and Relief to the Treasury. And the funds disbursed thereby would be disbursed under section 36 of the Disaster Preparedness and Relief Act.”

MLS further says in the Mid-Year Budget Review, Parliament approved an appropriation of K2 billion for disaster relief but some funds on this appropriation had already been spent leaving a balance of K643,875,000 for the second half in which the state of disaster has been declared. 

“Legally treasury can only disburse this amount. However, this funding must have been made through vote number 240, which is for the Vice President’s office.

 

“The total budget for the office approved by Parliament is K4,824,072,004.00 (K4.8 billion) but the office spent; actually overspent by K3,790,210,261.00 (K3.8 billion) by the time of the Mid-Year Budget Review leaving a balance of only K1,033,861,743.00 (K1 billion) for the second half of the year to 30th June 2020. 

“Therefore,” MLS says, “without supplementary appropriation treasury can only legally disburse K1 billion for the management of the declared disaster.”

The Society also notes that the Minister of Health announced on 10th March 2020 — before the declaration of the state of disaster — that the Treasury had disbursed K2.4 billion, which is K1 billion above the budget appropriation. 

“This amount would require a special request from the Commissioner of Disaster Preparedness and Relief to the Treasury and Treasury would need to complete a special Funding Authority for this amount while the allocation would have to follow appropriate procedures for availment and for unforeseen expenditure. 

“On the unforeseen vote, which is vote number 278, Parliament had appropriated K2 billion but some expenditure had been made so that at the time of the Mid-Year Budget Review the balance was K1,450,241,633.00 (K1.4 billion).”

MLS also discloses that another instruction that the President issued to Treasury was the increase in the funding allocation to MEDEF from K13 billion to 15 billion. 

“The Mid-Year Budget Review shows that Parliament only approved K1 billion under Vote number 020 miscellaneous payments to recapitalize MEDEF. 

“This K15 billion is eerie; it first came out in the President’s first pronouncement upon the declaration of a state of disaster as a fund to be set up; and then it resurfaces during the President’s second pronouncements as capitalization of MEDEF. 

“The Law Society considers that Parliament’s approval is required for this. The Law Society also notes that in the meantime, the Special Cabinet Committee says it now has a budget for K125 billion.

“All these developments raise serious matters as regards public finance and the legality of the disaster management scheme currently being pursued by the Malawi Government. 

“While seeking to manage the national and international crisis that the Coronavirus has attained, prudence requires that no other crisis be created in order to manage another crisis. 

“The nation cannot manage the Coronavirus crisis with a legal crisis for the consequences to the public purse could be as devastating or worse than the public health crisis itself. 

“The Law Society, therefore, strongly recommends an urgent legal overview of the mechanism put up to contain the Coronavirus pandemic,” says MLS in its paper signed by chairperson Burton Chigo Mhango; his deputy Patrick Gray Mpaka; secretary Martha Etta Kaukonde; Chrispin Ngunde (treasurer); Wesley Mwafulirwa (Chapter Rep, North); Mwai Msungama (Chapter Rep, South); Madalitso Kausi (Chapter Rep, Centre); and executive members Robert Nthewa; Vitumbiko Gubuduza and Edwin Dalo Mtonga.