By Kingsley Jassi
Economics Association of Malawi (Ecama) and Oxfam have urged the fiscal authorities to realign assumptions anchoring the fiscal policy, arguing that the negative outturn in most of the projections raise budget credibility concerns.
Representatives of the two institutions met members of the Budget and Finance Committee of Parliament on Wednesday in Lilongwe to provide insights into the mid-year budget statement presented to Parliament by Finance Minister Simplex Chithyola Banda on Wednesday.
An assessment by Ecama—through a consultant and supported by Oxfam—finds that all the assumptions in the budget, including growth rate, revenue, inflation rate, grants and expenditure have not turned out as expected.
It says the authorities were not realistic when coming up with assumptions anchoring the 2024-25 budget.
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“Budget projections must be based on realistic assumptions, especially on the budget resourcing side of revenues. The assumptions must be solid and based on the previous performance by month. Therefore, targeting of tax collections must be realistic,” the report reads.
The assessment finds that the 18.7 percent wage bill overrun has affected most of the expenditure lines that have suffered allocations cuts.
Ecama President Bertha Bangara Chikadza said the budget had been characterised by rising public debt.
C h i k a d z a recommended adoption of strict expenditure control measures and prioritisation that scales the budget to realistic levels.
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On her part, Oxfam Country Director Lingalireni Mihowa said the continued consumptive budgets that are also unbalanced keep hurting the economy— which she said needs improved productivity.
She suggested the mid-year review statement should have addressed the disparity between revenue and expenditure by introducing specific measures, stressing on the need to channel resources towards productive sectors to increase productivity.
On her part, chairperson for the Budget and Finance Committee of Parliament Gladys Ganda said some cuts would affect people, who she said are already dealing with prevailing economic shocks.
“If they reduce unnecessary trips, they can make a lot of savings that would go towards social protection programmes.
“We will engage them to discuss these issues and map the way forward,” Ganda said.
The assessment report noted persistent misses of monthly tax revenue collections and, according to Ganda, this comes at a time the Malawi Revenue Authority has implemented a number of reforms intended to enhance revenue collection.
“They did a lot of reforms in order to maximise revenue collection but it has transpired that they are not meeting the targets. As such, we will meet them to explain interventions they plan to put in place,” she said.
A number of reform suggestions were made by the parliamentarians to improve public finance management and fiscal policy.
