Expert defends budget review
An economic expert has commended government for reducing the national budget from K929.7 billion to K908 billion and various other interventions it is implementing to reduce expenditure as part of efforts to unlock funds from the International Monetary fund (IMF) Extended Credit Facility (ECF) programme.
The expert, Edward Chilima, says the figures government presented through Minister of Finance Goodall Gondwe are realistic and shows that government is committed to reduce domestic borrowing, an area the IMF faulted during its review of Malawi’s ECF programme with the fund.
In September, the IMF declared its US$150 million ECF programme with Malawi off-track following the government’s failure to meet agreed targets with the fund. The declaration meant Malawi could not access about US$20 million loan disbursement from the fund which was due to the country.
The IMF team is now in the country and is expected to start its two weeks mission Thursday. Chilima said with the current economic situation, the IMF package is very crucial.
“We cannot do without the IMF at the moment and it is critical that we get the pack, inorder to stabilise our economy,” he said.
While acknowledging that there is still need for fiscal prudence, Chilima said government has already shown its commitment by reducing the national budget.
“This is a very good sign. The budget also shows that over borrowing has been reduced which is one area that the IMF faulted us with,” said Chilima.
An IMF team led by Washington DC-based Malawi mission chief, Oral Williams, disclosed during the presentation of their review findings at Capital Hill in Lilongwe on Tuesday that government has, among other things, spent beyond target.
“Fiscals lip pages equivalent to about two percent of the GDP emerged during the second half of the 2014/15 fiscal year, in part because of overspending on the wage bill and these were exacerbated by revenue and external financing shortfalls,” said Williams.
On the IMF visit, Ministry of Finance Publicist Nations Msowoya said the government is optimistic that the IMF will be impressed with the turnaround of events.
“We are convinced that the IMF team will be happy with what the government has done. We have not over borrowed hence we are optimistic that we should be able to achieve all our set goals in the medium term,” said Msowoya.
The IMF declared Malawi off track because government breached borrowing targets, among others. In the previous budget, Malawi over borrowed by K78 billion as compared to a figure of K4 billion in the current financial plan.