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2016/17 budget to reach K1 trillion

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Minister of Finance, Economic Planning and Development Goodall Gondwe and his team are expected to come up with a 2016/17 budget that responds to the needs of Malawians, but there are emergency constraints like floods and droughts which will pinch the fiscal plan, Malawi News has learnt.

In an interview on Friday, Gondwe disclosed that the fiscal plan is going to be outside K1 trillion but he could not provide the actual amount, saying consultations are still underway.

He also confirmed that his ministry had discussions with the Reserve Bank of Malawi (RBM) and the Malawi Revenue Authority (MRA), among others, for a picture of how much money that could be available for the next fiscal year.

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“Well, we are still working on the budget and I don’t think I can give you more details now. But, yes, it will be outside K1 trillion. For now, that is what I can tell you,” said Gondwe.

With direct budgetary support almost completely out of the picture, government will mostly have to rely on funds from MRA, grants and other domestic sources to support the fiscal plan.

When different departments and agencies presented their expenditure projections to parliamentary committees ahead of the national budget that is currently being implemented, some Members of Parliament warned that bloating the budget to K1 trillion would be unsustainable.

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But according to observers, with the devaluation of the kwacha, a fiscal plan that is less than K1 trillion could not meet the needs of the country.

In an earlier interview with Malawi News, Ministry of Finance spokesperson Nations Msowoya said apart from the usual developments that a national budget has, Treasury will have to factor in the floods and drought that hit some parts of the country.

Unprecedented floods caused by torrential rains have recently hit some parts of the northern region, particularly Mzuzu, claiming at least six lives and displacing almost 8,000 others in the process.

On the other hand, most districts in the Southern Region have been hit by drought which has left hundreds of thousands of Malawians in dire need of food aid, forcing President Peter Mutharika to declare Malawi a disaster state, effectively appealing for food aid from well-wishers.

Msowoya said all consultations, meetings and projections on the national budget will be concluded by the end of this month.

“These things [floods and droughts] were not there in the past, so obviously adjustments have to be made in the next budget just like it was the case with the current budget. So obviously, funds will have to be allocated judiciously so that no section suffers,” said Msowoya.

He added that with the declaration by the International Monetary Fund (IMF) that its Extended Credit Facility (ECF) in the country is back on track, Treasury will have to be particularly careful so that the economic gains realised are not spoiled.

“We will have to do more consolidation of our economic progress so that we maintain a more favourable condition,” said Msowoya.

On the other hand, Msowoya said all normal allocations for recurrent transactions and personal emoluments of public servants will not be affected by the floods and droughts recovery measures.

One of the developments that led to IMF declaring its ECF programme in Malawi off-track was government’s over-borrowing, which has since been put under control, according to government.

Parliament is expected to start meeting next month for the budget.

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