Economic experts have tipped Treasury to make realistic revenue projections in the 2022- 23 National Budget and beyond to avoid disrupting government operations in the course of implement the financial blueprint.
The advice follows revelations that the government collected K19.20 billion non-tax revenue during the first four months of the 2021- 22 financial year against the projected K69.60 billion.
A weekly financial market update by Nico Asset Managers for the week ending January 14 quotes Reserve Bank of Malawi figures that reflect on the development as a 72 percent underperformance.
“According to the commissioner of tax at Malawi Revenue Authority, the declining non-tax revenue collections confirm that the economy is not performing well,” the report reads.
The report adds that while non-tax revenue has been on downward spiral, tax revenue has over the same period sustained a strong performance, amounting to K434.80 billion.
Economics Association of Malawi Executive Director Frank Chikuta said the underperformance could reflect that assumptions which were used in making the projections were very optimistic and that some of the assumptions did not hold due to unforeseen circumstances.
“Going forward, the authorities need to be realistic in the macroeconomic assumptions which are used to come up with the projections. The revenue collecting agencies should also work hard to achieve their revenue targets,” Chikuta said.
Malawi Economic Justice Network Southern Region Coordinator Mike Banda expressed similar sentiments, saying the development negatively impacts government operations.
Banda added that government should start having a budget it can fund and sustain rather than having huge budgets which eventually make government run to borrowing to fund the deficit.
Economist from University of Malawi Ben Kalua said the underperformance signals reduced economic activities at the back of economic fluctuations which have stemmed from the Covid pandemic.
“It, however, looks like Covid is easing and people are learning to live with it; therefore, in the short to medium term, economic activities may pick up which will result in the picking up of non-tax revenue,” he said.
Non tax revenues are government monitory collections which come from fees and penalties.
However, the Ministry of Finance says the 2022- 23 National Budget, which is expected to be presented to Parliament next month, will focus on reducing total public debt, hovering around K5.5 trillion, while implementing the 10- year Malawi 2063 development plan.
The ministry has been soliciting budget input from the private sector, academia, civil society, parliamentary committees, and other professional bodies for consideration in the new financial blueprint.
Treasury spokesperson Williams Banda said in a recent interview that while stakeholders made contributions—through the budget consultation exercise—the 2022-23 budget would focus on reducing debt.
“We have received thousands of views regarding the budget. The ministry will scrutinise every view that we have received. We are working on reducing the debt that we have accumulated and work on mobilising local resources for the country to stop having a donor-dependent budget,” Banda said.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
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