‘Hard work key to economic performance’


Minister of Finance, Economic Planning and Development Goodall Gondwe yesterday presented a K1,297,200,000 budget which has been described by some quarters as ambitious and demanded seriousness in its implementation.

In the 2017/2018 Budget Statement, Gondwe indicated that the budget has been formulated on two significant budgetary projected occurrences.

Gondwe said the government is expecting to have enough domestic revenue that could exceed recurrent expenditure by close to K32 billion, and that the increased recurrent expenditure would be lower than the increase in development expenditure.


In the budget, the education, science and technology sector has been allocated K235 billion (18.1 percent of the budget)—which is the highest allocation—up from K147.6 billion in the 2016/17 budget, representing a 59 percent increase.

The agriculture sector has been allocated K192 billion (15.5 percent of the total budget), down from K198.5 billion in the previous financial year, representing a three percent drop. Gondwe did not explain what accounted for the reduction in the allocation.

On the other hand, the health sector has been allocated K129 billion, representing 9.9 percent of total budget, up from K95.8 billion in the 2016/17 financial year.


“Total expenditure (the budget) is projected at K1,297.2 billion (26.1 percent) and register a 13.5 percent increase at current prices but decline somewhat in real terms,” Gondwe said.

He added: “This is particularly true of recurrent expenditure which will decline in real terms from 20.5 percent to 19.1 percent of GDP, whereas development expenditure will increase by 32.6 percent in current prices and register a slight decline in real terms by 0.6 percent of GDP.”

Gondwe further said the government expects an increase in total revenue and grants should be increased from a likely out-turn of K977.8 billion to K1,108,800,000.

On tax measures, Gondwe said the tax-free income bracket has been increased from K20,000 per month to K30,000.

He also said in consultation with the representatives of employers and employees, the minimum wage has been increased from K19,000 to K25,000 per month.

He, however, said government has introduced an additional Pay As You Earn (Paye) bracket of 35 percent for salaried monthly income of above K3,000,000.

“Mr. Speaker Sir, the increase of the minimum Paye threshold from K20,000 to K30,000 is expected to cost the government revenue in excess of K10 billion. It is, therefore, prudent for the government to explore other means of recouping this loss in revenue. One of the ways of recovering this lost revenue is by bringing in more progressivity in our tax system,” Gondwe said.

Gondwe said the average public wage bill will increase by 13 percent.

He also said it is projected that domestic net borrowing would be reduced from K63.6 billion (1.5 percent of GDP) to K27.5 billion (0.6 percent of GDP).

“In light of this development, the budgetary support that has been received will all be used to repay domestic borrowing and the huge arrears that were accumulated by June 2014,” Gondwe said.

In the statement, Gondwe also announced that Value Added Tax on milk, which was introduced last year, has been removed in order to encourage farmers to produce more milk for the market and increase its uptake by many Malawians.

In his statement, Gondwe also announced that allocations to governance institutions such as the Anti-Corruption Bureau, the Directorate of Public Prosecutions, the Office of the Ombudsman, the Legal Aid Bureau and Assets Declaration Directorate, have been increased.

On development budget, Gondwe announced that in agriculture and climate change, the development budget has been increased to K62 billion which is 17.4 percent of the total development budget.

In education sector, he said, the development budget allocation is K38.7 billion, representing 11.1 percent of the total development budget.

Gondwe also said the allocation to health is K25.7 billion, roads sector (K69.9 billion) and in the energy sector (K12.7 billion) while in tourism it is K1.3 billion.

Gondwe also announced the introduction of 10 percent Excise Tax on television subscription fees.

“Excise taxes have a multifaceted function ranging from revenue generation role to income distribution and influencing consumption behaviour of the populace. To the extent that we are shifting reliance, in the long term, on domestic resources mobilisation from income and investment to consumption taxes; and to expand the revenue base, we are introducing 10 percent excise tax on fee-based TV services,” he said.

The finance minister also announced that, in a bid to encourage Malawians to participate in the passenger service transport sector, the government had created Customs Procedure Code 443 for buses and minibuses to be imported duty free.

“Considering the excellent uptake in the public passenger transport sector that ordinary Malawians are participating and in line with sun-set clauses on tax incentives policy that government has put in place, I wish to inform the House that CPC 443 will be deleted. The relevant customs tariff headings for buses and minibuses shall be amended to provide duty and excise free provisions for buses and minibuses that are less than five years old,” he said.

Gondwe said the government is determined to move the country from the current poor status to a better status.

“Overall Mr. Speaker, Sir, the government believes that after this rebound, the country can dedicate itself to hard work for everyone because we believe that this country can do better than most instead of worse than most. The fulfilment of this country’s aspiration, to emerge out of the cocoon of the poorest countries in the world depends on hard work and the perfection of its future economic performance. We need to enhance the spirit of patriotism, integrity and hard work,” Gondwe said.

Leader of Opposition Lazarus Chakwera was cautiously optimistic, saying that although Gondwe’s statement addressed most of the issues they have been talking about, they would ensure that the government does what it has promised.

“It is good statement. Some of the issues we have been raising have been mentioned. We are hopeful that if they have declared that they will fight corruption and theft of government resources, it is like things are [moving in] the right direction. But we are just on the edge of the hole, they are saying we have just come out of. We can easily fall into the hole again, if they are not serious,” Chakwera said.

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