Budget in K209bn deficit in first third


By Taonga Sabola

The nine month 2021- 22 National Budget recorded a K209 billion deficit from July to September as expenditures far outweighed revenue, the latest Reserve Bank of Malawi (RBM) Financial and Economic Review has shown.

The development has not come as a surprise considering that Finance Minister Felix Mlusu made a provision of a K718. 3 billion deficit come March 31 2022.


According to RBM, during the period, total revenues amounted to K346.1 billion while expenditures hit K555.5 billion.

“The preliminary position for total revenue collections, at K346.1 billion, represented a decrease of 8.8 percent from K379.7 billion recorded at the end of the second quarter of 2021. Annually, total revenue collections increased by 8.9 percent from K315.8 billion mobilised in the third quarter of 2020.

“Both domestic revenue collections and foreign receipts contributed to the reported decrease in the quarter under review. Under domestic revenues, tax collections slightly increased by 2.9 percent to K315.7 billion while non-tax revenues decreased by 79.1 percent, offsetting the effect of the increase in tax collections,” the RBM review reads.


It adds that the outcome mainly followed government receipt of dividend payments in the previous quarter.

“Foreign receipts in favour of various government projects on the other hand declined by 25.9 percent to K21.1 billion in the quarter under review,” the central bank says.

RBM says total expenditures in the third quarter of 2021 rose by 14.4 percent to K555.5 billion.

It says the outturn was attributed to an increase in recurrent spending, by 20.7 percent to K479.6 billion.

The central bank says pensions and gratuities, generic goods and services and salary payments reported increases of 16.0 percent to K26.2 billion, 14.5 percent to K69.7 billion and 10.9 percent to K154.5 billion, respectively.

“Meanwhile, development expenditures declined by 13.9 percent to K75.8 billion, following a decrease in the foreign financed component, which declined by 60.2 percent to K27.0 billion, while domestic financing of development projects increased by 141.6 percent to K48.8 billion.

“However, the increase in domestically financed development expenditure was not large enough to offset the decrease in the foreign component,” RBM says.

Treasury spokesperson Williams Banda asked for more time to scrutinise the RBM review before commenting on the matter.

On May 28 this year, Mlusu unveiled a nine-month 2021-22 National Budget pegged at K1.99 trillion.

Malawi has a shorter financial year this year as it plans to change the financial cycle from the current July to June budget to April to March.

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