The Tonse Alliance government led by Malawi Congress Party leader Lazarus Chakwera who is the country’s State President yesterday unveiled a K722 billion provisional budget in which it has planned to implement some of its campaign promises including raising the Pay as You Earn tax-free threshold to K100,000 from K45,000 per month.
The government has also reduced the price of a 50-kilogramme bag of fertiliser from an average of K21,000 to K4,495 which will benefit the country’s 3.5 million smallholder farmers.
In the provisional budget presented by the new Finance Minister, Felix Mlusu, government has also increased the youth loans under the Malawi Enterprise Development Fund from the current K15 billion to K40 billion and the amount will eventually be increased to K75 billion
“This government intends to create 200,000 enterprises run by the youth which will create over 600,000 jobs,” Mlusu said.
During its campaign, the Tonse Alliance had promised to create one million jobs in its first year.
The Minister of Finance said to ensure that only Malawians benefit from the subsidised fertiliser, the national identity card will be used to purchase the commodity, adding that border security will be enhanced to prevent smuggling of the fertiliser into neighbouring countries.
According to Mlusu, in addition to the loans, government will also expand the youth internship programme and the private sector will be incentivised to give internship opportunities to the youth.
“With this, more job opportunities are expected to be created among our youths,” Mlusu said.
Mlusu further said government has allocated resources for state-owned grain marketer, the Agricultural Development and Marketing Corporation (Admarc) to buy maize and other farm produce from farmers and that Admarc will also be allowed to borrow money from commercial banks.
This, according to Mlusu, would help provide farmers with a ready market for their produce.
On minimum wage, Mlusu said government will engage the Malawi Congress of Trade Unions and the Employers Consultative Association of Malawi to review the minimum wage from the current K35,000 per month to K50,000 per month.
The provisional budget has been crafted on the assumption that inflation would average 9.4 percent, policy rate would remain constant at 13.5 percent and that the exchange rate would remain stable at around K750 to the dollar.
The provisional plan has projected revenue and grants at K459.1 billion of which K51.9 billion would be grants and the remaining K407.2 billion would be locally generated resources.
Net domestic borrowing has been pegged at K209.5 billion between July and October.
Mlusu promised to bring finer details of the financial plan when he presents the full budget in the coming months.
Reacting to the provisional budget, Democratic Progressive Party spokesperson on finance, who is also former Finance Minister, Joseph Mwanamvekha, said his party cannot wait to see how the Tonse Government intends to implement all its campaign promises amidst a shrinking resource envelope.
Mwanamvekha also appealed to the government not to victimise civil servants who were recruited under the DPP regime.
He said the DPP stands ready to provide checks and balances to the government, adding that the party is determined to get back in power in 2025.