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Government deficit narrows in March

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KUMWENDA—It is a fiscal policy stance

A monthly economic review published by the Reserve Bank of Malawi (RBM) has shown that government budgetary operations closed with a deficit of 0.4 percent of gross domestic product (GDP) in March 2022.

The development is seen as an improvement from a deficit of 1 percent of GDP recorded in February and a deficit of 0.9 percent of GDP recorded in March 2021.

According to the review, this followed the outturn in total revenues of K167.4 billion against total expenditures which amounted to K208.6 billion in the review month.

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“Revenue mobilisation increased by 4.7 percent to K167.4 billion in the review month, and by an increase of 28 percent from the K130.8 billion collected in the corresponding month of 2021.

“The increase in total revenues was explained by a rise in domestic revenue of K44.7 billion to K157.1 billion in March 2022, following increases in both non-tax and tax revenues to K51.3 billion and K105.9 billion, respectively.

“Government expenditures decreased by K67.6 billion to K208.6 billion in March 2022. This development was explained by decreases of K40.7 billion and K26.8 billion in both recurrent and development expenditures to K170.1 billion and K38.5 billion in the final month of the 2021/22 fiscal year, respectively,” the review reads.

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In an interview, economist Thomson Kumwenda said reduction in government expenditures can be permanent or temporary in nature.

Kumwenda further said temporary reduction in expenditures could be as a result of delayed implementation of projects; again, due to availability of resources but that will result in increased expenditures in subsequent periods.

Director for Centre for Research and Consultancy Milward Tobias said: “It can be speculated that the decrease can be because of the fact that the 2021-22 national budget was lower than the 2020-21 since the former was for nine months.”

In a recent interview, Minister of Finance Sosten Gwengwe indicated that Treasury is implementing a strategy aimed at reducing the financing gap in national budgets.

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