Budgetary operations registered a K130.4 billion deficit in April, the first month of the 2025-2026 financial year, as expenses far outweighed revenue.
According to the Reserve Bank of Malawi (RBM) April 2025 Monthly Economic Review released on Friday, the government expenditures hit K565.5 billion in April 2025 from K498.2 billion in March.
According to the review, the increase was on account of increases in recurrent and development expenditures.
“Specifically, recurrent expenditures grew by K32.0 billion (7.8 percent) to K442.3.billion and development expenditure increased by K35.3 billion (40.2 percent) to K123.2 billion in the month,” RBM says.
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Revenue, on the other hand, also increased by K89.8 billion to K435.1 billion in April 2025 from K345.3 billion in March.
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“The outturn was driven by increases in tax revenues and grant collections of K75.4 billion (31.4 percent) and K27.1 billion (68.7 percent) to K315.5 billion and K66.5 billion, respectively.
“On the other hand, non-tax revenues declined by K12.7 billion (19.3 percent) to K53.1 billion during the period under review,” RBM says.
Speaking in Parliament on February 28 when he presented the 2025- 2026 national budget, Finance Minister Simplex Chithyola Banda said he expects total expenditure for this financial year to total K8.05 trillion.
According to Chithyola Banda, total revenue and grants for the 2025/2026 financial year are estimated at K5.58 trillion, of which, Domestic Revenues are estimated at K4.44 trillion, of which, tax revenues are estimated at K4.33 trillion and other revenues have been projected at K106.02 billion.
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He said grants are estimated at K1.14 trillion, of which, K1.10 trillion will come from International Organisations and K86.36 billion from Foreign Governments.
“The 2025/2026 Financial Year’s overall balance is estimated at a deficit of K2.47 trillion, which is 9.5 percent of GDP.
“This deficit will be financed through domestic borrowing amounting to K2.33 trillion, representing 9.0 percent of GDP and K145.78 billion foreign borrowing,” he said.
In its statement on June 4 after concluding Article IV consultations with Malawian authorities, the International Monetary Fund (IMF) team observed that domestic revenue mobilisation is urgently needed to achieve fiscal sustainability in an equitable way.
“This could be achieved through a combination of broadening the tax base and tax policy instruments (e.g., reducing exemptions, and personal and corporate income tax reform).
“Improving wage bill efficiency and rebalancing expenditures towards human capital and social protection could support these efforts,” IMF said.
