Alliance Capital Limited says while it has hailed the 2017/18 national budget, saying one can ably pick out positive undertakings, certain crucial elements in achieving the six percent growth rate are missing.
In the Market Review Report, the institution observes that the budget has been engineered to continue nurturing macroeconomic stability that Malawi is currently enjoying and promote economic growth; but fails to succinctly spell out how the latter will be achieved.
The report cautions the authorities to ensure consistency in their efforts to contain fiscal overruns, maintain economic stability and constantly improving tax administration.
“For example, there are no incentives for business, trade and export and no meaningful support to the private sector. We also feel that although it is a development budget as per thresholds and standards, the economy is still weak and vulnerable to shocks,” the report adds.
It says, however, that little has been explained on how it will seek to support and fast track the economic rebound, further saying that the private sector, which by all means also felt the full wrath of the economic turmoil, has been grossly left out.
However, it has hailed authorities for the simultaneous decrease in recurrent expenditure and increase in development expenditure, which it says also gives assurance that fiscal consolidation is not merely a song and that government is very committed to having a development-oriented budget as opposed to a consumption budget.
“The Minister of Finance, Planning and Economic Development, Goodall Gondwe, continually emphasised the need to exercise prudence in expenditure. It is also commendable to note that net domestic borrowing will substantially decrease to a little over K27 billion from K63.6 billion and it is our sincere hope that this will be religiously adhered to,” reads the report.
Alliance Capital Limited notes that coming from rather precarious economic times, Malawi is poised to collect ample domestic revenue that could exceed the next recurrent expenditures by at least K32 billion.
“This just resuscitates the optimism that some quarters, including ourselves have had for a long time that we can ably finance government operations solely through domestically generated resources,” the report reads.
Alliance Capital Limited further argues that while it is also commendable that government has given the lions share to education, this shows long-term view because fruits of education are not immediate.
“Spending more money on education, however, is not a guarantee that it will work. People need to start graduating from secondary school with some skills and knowledge,” the Alliance Capital Limited report says.