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K1 trillion 2016/17 budget not realistic—experts

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Some economic commentators have said that although the government is under pressure to provide social services to the public, over K1 trillion for 2016/17 budget cannot be realised from the taxes and other known local resources.

Reacting to what Finance Minister, Goodall Gondwe, told Malawi News that the fiscal plan is going to be outside K1 trillion, Chancellor College economic professor Ben Kalua said Malawi Revenue Authority (MRA) collections in the past 12 months have not been inspiring.

During the mid-year budget review, the government was forced to slash the 2015/16 National Budget from about K929.7 billion to K906 amid government’s failure to meet revenue collection targets in the first half of the financial year.

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“MRA has been underperforming consistently for over a year. So, I don’t think there is any realism. Yes, there are a lot of areas that the government is expected to pay more. Poor countries like ours basically require governments’ intervention in the provision of social services but to be poor also makes it impossible, to a larger extent, to contribute to the taxes and other financial contributions,” Kalua said.

He said a zero aid budget that the country is operating on should have given Malawians time to reflect on what is available and what is not available and start afresh.

While saying the country’s budget estimates are always short of being realistic, former Economics Association of Malawi Chief Executive Officer Nelson Mkandawire, said if the country had resources, the budget estimates of over K1 trillion would be ideal for the country’s estimated population of 17 million.

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“Looking at the population of Malawi, we need more resources for our education system, we need more resources for our health system, and we need more resources to make agriculture tick. But because we have never had enough resources, we even revise the budget downwards because the resource envelope in constrained.

“So, depending on the local resource envelope including MRA collections, which is the major income earner for the nation, obviously the figure is not realistic because of where we are getting resources from. This is why we have been saying the government should come with deliberate efforts to ensure that the private sector thrives. If you have a thriving private sector, then you would have a wider base for revenue collection but if they are constrained, the figure cannot be realised,” Mkandawire said.

He then said the government should consider issues of electricity to enable industries operate for 24 hours and reduce interest rates to facilitate private sector borrowing.

Parliamentary committee on Budget and Finance already warned that bloating the budget to K1 trillion would be unsustainable.

Gondwe said the ministry has been discussing with some stakeholders such as the Reserve Bank of Malawi and MRA for a picture of how much could be available for 2016/17 budget.

Some of the issues to be considered are the drought and floods that have affected other parts of the country.

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