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Fresh calls for fiscal prudence

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Economic experts have reiterated the call for prudence in the fiscal space by ensuring structural cuts on expenditures, enhanced fight against corruption and adoption of an effective public finance management system.

This, the experts say, will help restore donor confidence while resuscitating the local economy.

In an interview, former chief economist at the International Monetary Fund (IMF) Godfrey Kalinga said Malawi’s debt levels have become unsustainably high, resulting in structural fiscal deficits.

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He called for prudence in expenditure to ensure that it tallies with revenue streams and help narrow the ever widening budget deficits.

“Cutting structural expenditures is not a simple game; one of the areas that has been identified is the Affordable Inputs Programme (AIP), which has been taking up between 1.5 and 2 percent of GDP.

“If you look at your revenues which is about 13 or 14 percent of GDP, if you want to eliminate debt for the fiscal deficit, it means you have to cut expenditures. If you take items, for example wages and salaries and interest rates, they take up more than 80 percent of the revenues and those things you cannot cut. So the remaining gap that you can cut is very small and narrow,” Kalinga added.

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He emphasised that the Ministry of Finance does not have the capacity to come up with programmes that will be universally accepted.

Malawi Economic Justice Network Southern Region Coordinator Mike Banda said there is a need to revisit the country’s expenditure and enhance the fight against corruption.

“The challenges we are facing are solely because we do not have exportable goods. The little forex we are able to capture we are externalising it through importing foreign products; so, if we could invest in the productive sectors, we would be able to turn things around,” Banda said.

Minister of Finance Sosten Gwengwe said the government was managing the situation in cooperation with development partners.

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