By Stevie Chauluka:
Economics Association of Malawi (Ecama), an umbrella body of economists in the country, has challenged the Treasury to trade carefully when formulating the 2019/20 national budget.
Ecama said sustaining economic stability registered in the recent past should be one of the pinnacles for the next financial plan.
The call comes after Finance Minister Joseph Mwanamvekha presented a K511.3 billion four-month provision budget to Parliament on Friday, already rated by commentators as unrealistic.
Among other things, in the interim budget, Mwanamvekha presented an ambitious plan of reducing domestic debt to 0.3 percent of the Gross Domestic Product from the current 4.1 percent.
Speaking in a telephone interview, Ecama Executive Director, Maleka Thula, said the body expected the government to formulate a plan that would facilitate attainment of sustainable economic growth.
“We should not expect much from the provision, budget, for it is meant to meet basic needs in the economy for continued operations of the government. So, we don’t want to pile pressure on the government.
“However, the government should ensure continuation of economic stability of the country in the main budget. It should be a budget that puts priorities in order, so that we move forward,” Thula said.
In recent months, key microeconomic indicators have been showing positive signs.
For instance, headline inflation, seen at 8.9 percent in May 2019, has remained within a single digit band since August 2017, the exception being November last year.
Interest rates have been going down after the Reserve Bank of Malawi slashed its policy rate twice this year alone to stand at 13.5 percent.
However, some of the indicators have taken a u-turn in recent weeks, posing a threat sustainance of registered gains. The local unit, the kwacha, for example has been depreciating, now trading at around K815 to a dollar, posing threats to inflation and foreign exchange reserves.
Taking these factors into account, Thula, urged the government to formulate a financial plan that would facilitate productivity and growth, not consumption.
He said it was high time Malawi starts thinking of development and allocating sufficient resources funds towards sustainable economic development in sectors such as irrigation and energy.