By Rebecca Chimjeka, Chimwemwe Mangazi:
Finance Minister Goodall Gondwe Friday wore a brave face and attempted to paint a rosy picture of the local economy despite figures indicating that the 2018/19 financial plan remains off-balance.
Presenting a mid-year budget statement in Lilongwe, Gondwe said failure by the revenue and expenditure sides of the budget to balance would result in increased domestic borrowing from the planned K164.2 billion to K214.7 billion.
“The financial plan has been thrown off balance by the unfulfilled K60 billion commitment by the World Bank and weak non-tax revenue despite improvements in tax revenue performance,” the minister said.
Gondwe told a half-full august House that the development has seen Capital Hill trimming
the 2018/2019 financial budget to K1.429 trillion from the K1.454 trillion presented in May last year.
Gondwe has also revised downwards estimated revenue and grants for the year from K1.2493 trillion to K1.1737 trillion.
According to Gondwe, as at December 31, expenditures were recorded at K691.2 billion, consisting of K585.8 billion in recurrent expenditure and K97.4 billion in development expenditures.
He said the total expenditure registered a large underspending amounting to K84.1 billion (about 10.8 percent) emanating from both the recurrent expenditure and the development budget.
Revenue, on the other side, amounted to K549 billion comprising K514.8 billion in domestic revenue and K34.2 billion in grants.
Gondwe praised government ministries and departments for their fiscal discipline which has resulted in most of them spending within or even below their limits.
During the first half of the fiscal year, over-expenditures were recorded by the Malawi Defence Force (MDF) and Malawi Police Service (MPS) as well as Farm Input Subsidy Programme.
Gondwe justified the over-expenditures in MDF and MPS to the procurement of protective gear in readiness for the May 21 elections.
Economics Association of Malawi president Chikumbutso Kalilombe said his association is worried with the increase in approved net domestic borrowing saying the same has been our Achilles’ heel as an economy.
He said domestic revenue growth is good news but, within it, the underperformance of corporate tax might be a sign that the business environment is struggling.
“Underperformance of development expenditure is a worry for the economy as expectation is that same induces economic growth. The overreliance on donor-financed projects under this line is a worry.
“Reduced spending on maize is positive and shows that, with good planning, we can save more under this line,” Kalilombe said.
University of Malawi’s Chancellor College economics professor Ben Kaluwa said while it is commendable that government has recorded improvements in revenue generation, there was need to go deeper into the causes of under-expenditure.
Kaluwa said under-expenditure could also mean inefficiencies in ultilising the allocated resources.
A vibrant writer who gives a great insight on hot topics and issues