By Letuka Chafotsa
MASERU – The Democratic Congress (DC) Shadow Minister of the Public Service Tsukutlane Au said the 2014/2015 national budget was unfair to low income civil servants and lacked developmental prospects.
Au said on Monday that from 2005/2006 to 2012/2013, before the current administration, the government of Lesotho had tried to ensure that it reduced recurrent expenditure and increased capital spending, which is more inclined towards developmental projects.
“The country’s infrastructural and capital spending needs are a function of broad societal and economic developments including job creation to curb ever-swelling unemployment,” Au said.
Au said the recurrent-capital ratio did not indicate that there were prospects of reducing the huge unemployment rate the country is facing.
The recurrent–capital ratio of the 2014/2015 budget proposals stands at 80 to 20 percent of the total budget.
According to Au, the ratio hinders job creation so the government needs a deliberate policy to reduce recurrent spending and increase capital spending to ensure a high level of capital investment which would stimulate economic growth.
He said from 2005/2006 the ratio was at 79 to 21 and was gradually reduced to 61 to 39 in the 2012/2013 financial year.
“Starting from last year’s budget the government increased the recurrent spending which would have accelerated the development of infrastructure the country desperately needs,” Au said.
Au said in the previous budget, the recurrent–capital ratio was 67 to 33 percent of the total budget which means that the government increased the recurrent spending by six percent compared to the 2012/2013 fiscal year.
Au further said low income earners were going to suffer due to inflation which Finance Minister Leketekete Ketso said would be six percent.
The public service comprises government departments, the teaching service and disciplined forces.
“Higher income public servants are the biggest beneficiaries from the 2014/2015 fiscal year budget,” Au said.
The budget stipulates that: “To reduce the tax burden and encourage tax compliance, this budget proposes reduction in both the lower and upper personal income tax rates, from 22 to 20 and 35 to 30 percent, respectively.”
Au said that civil servants in the upper threshold had their net pay increased by three percent after inflation adjustment while the lower threshold would remain at the initial point after inflation adjustment.
Arthur Majara, a local economist, on Tuesday said that government spending should be intertwined with resources.
“Revenue source should be used sparingly for the productive sector or building government savings and certainly not to finance the recurrent budget, especially government size,” Majara said.
Majara said the civil service was bloated and should be cut in the coming year.