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Expectations high as Goodall presents mid-term budget

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As Finance Minister Goodall Gondwe gears to present the 2016/17 mid-term budget statement in Parliament Friday, various commentators have expressed high expectations from the financial plan.

Economic commentators yesterday said chances are high that the K1.13 trillion financial plan will be slashed.

There are already high expectations from key stakeholders over Gondwe’s revised budget following some slippages encountered in budget implementation in the first half of the financial year.

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Commentators say instilling fiscal discipline has remained a challenge in the past six months as government has, among other things, continued to spend beyond its means, influencing growing appetite for borrowing.

A report released by the Reserve Bank of Malawi (RBM) shows that government is still spending beyond its means with expenditure for the third quarter of 2016 alone rising by K43.8 billion to K262.1 billion.

The total expenditure is against total revenues of K205.5 billion, creating an overall fiscal deficit of 1.5 percent of the GDP.

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In an interview, Economics Professor at the University of Malawi’s Chancellor College, Ben Kalua, said the system has not done well on most fronts, including fiscal and inflation management.

“We expect realistic budget cuts as the finance minister

 

presents the mid-term statement; cuts that give a true reflection of the current economic trends,” said Kalua in a telephone interviews.

He said businesses have in the past six months been unable to make significant strides towards economic growth in the past six months.

When presenting the budget, Gondwe estimated economy to grow by 5.1 percent in 2016, a rebound from 3.1 percent Gross Domestic Product (GDP) growth recorded the preceding year.

Only until September 2016, did the government revise the real GDP growth rate by 2.2 percentage points to 2.9 percent.

Economic Empowerment Action Group President, Lewis Chiwalo, says he anticipates Gondwe to outline policies that would spar economic growth through the private sector in the mid-term budget statement.

He recommended that the government revised some expenditures which he deemed unrealistic and ill-timed.

“We need to act in line with the economic needs. The minister must be prudent in ensuring that we create an environment suitable for doing business,” said Chiwalo.

Economics Association of Malawi (Ecama) president Henry Kachaje, however, touted efforts deployed by the minister towards ensuring drop in inflation among other things.

He said having been implemented at a time the country is facing economic hurdles; treasury has deployed relevant effort towards ensuring positive implementation of the financial plan.

“One key area to focus on is improved revenue collection by MRA which has in the first half of the year been satisfactory,” said Kachaje.

He then recommended that the minister be radical during the budget adjustments.

The 2016/17 national budget is being implemented amid a financial deficit and at a time the nation has no substantial donor budgetary support with nearly half its population facing hunger.

By early this month, only K23 billion worth of grants were disbursed by development partners against the expected K103 billion for the entire fiscal year.

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