The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has warned of continued mismatches between revenue and public expenditure as the Covid pandemic is still taking its toll on the economic landscape.
The local industry players’ umbrella body has since cautioned the Treasury against insatiable appetite for borrowing and the need to consolidate efforts towards intensive resource mobilisation through tax revenues.
This is contained in the MCCCI April Economic Review issued Monday.
In the review, the chamber says there is a need for the Treasures to balance the fiscal space.
For instance, the report says higher spending would require that the authorities either take on more debt or increase taxes, or both, while efforts to boost tax revenues, although politically and socially challenging, would provide much-needed resources to either increase spending or contain debt.
“The first and most urgent thing to do is to put in place a fiscal policy that avoids an early and excessive withdrawal of fiscal support during the pandemic while at the same time ensuring medium-term sustainability of public finances to anchor the stability of the domestic financial market,” the report reads.
It says avoiding a premature withdrawal of support in 2021/22 fiscal year is important, given that Malawi still faces the risk of contagion.
It says to improve the prevailing business environment to engineer a robust post-Covid recovery, policy makers need to look for opportunities.
It adds that, to maximise tax revenue collection, the government should widen the tax base by intensifying regulation of the informal and the unregulated industry through targeting businesses that are non-tax compliant, in the process leveling the playing field.
In an interview, Minister of Finance Felix Mlusu said the issues will be addressed in the 2021/22 national budget.
“I will present the national budget in Parliament this Friday and all the issues will be highlighted therein,” Mlusu said.