The 2020/21 national budget recorded a deficit of K86 billion in November 2020 as expenditures far outweighed revenue, the Reserve Bank of Malawi (RBM) has said.
The deficit is K80.8 billion more than the K5.2 billion shortfalls recorded in October.
In its November 2020 Economic Report, RBM says revenue collection for the month of November 2020 totalled K93.7 billion, which was a decline of 26.4 percent (K33.6 billion) from K127.3 billion that was collected in the previous month.
The bearish revenue performance in November was as a result of a decrease in both domestic revenue collection and foreign receipts.
RBM says domestic revenues declined by 17.3 percent to K83.6 billion, while foreign receipts declined by 61.6 percent to K10.1 billion.
“Under domestic revenue collection, tax revenue collections recorded a decline of 19.0 percent (K18.4 billion) to K78.4 billion, while non-tax revenues recorded an increase of 21.3 percent (K919.8 million) to K5.2 billion,” the report says.
On the other hand, expenditures during the month recorded an increase of 35.4 percent (K46.9 billion) to K179.4 billion.
The upturn in expenditures was attributed to an increase in recurrent expenditures by 41.5 percent to K164.0 billion, mainly due to expenses towards the Affordable Input Programme.
“On the other hand, interest payments recorded a decrease of 60.6 percent to K10.1 billion, while development expenditures declined by 7.3 percent to K15.4 billion,” RBM says.
But Treasury spokesperson Williams Banda Sunday said budget implementation was on track and Malawians should not be worried.
“The approved 2020/21 budget took care of this deficit in the K754 billion. You may recall that it has a deficit of K754 billion, a clear testimony that we are on track.
“On revenue, each month has its own cash flow and target based on macroeconomic fundamentals for the month,” Banda said.
Speaking when he presented the budget, Finance Minister Felix Mlusu said the overall balance had been projected at K754.8 billion, which would be financed by foreign borrowing amounting to K224.8 billion and K530.1 billion from domestic borrowing.
He said the anticipated domestic borrowing would represent 7.4 percent of the country’s GDP.
As at end of June 2020, Malawi’s total public debt was recorded at K4.1 trillion, the majority of which, at 57.3 percent, is domestic debt. Malawi’s domestic debt is currently rated at high risk of debt distress.