Report fears Freddy could storm budget

JOOMA—Transparency and accountability are

By Cathy Maulidi:

There are fears for the 2023-24 budget following Cyclone Freddy that has ravaged the country.

An analysis by Economics Association of Malawi (Ecama), Oxfam and Lilongwe University of Agriculture and Natural Resources (Luanar) suggests the budget deficit might worsen by as much as K700 billion.


Presenting the findings on Thursday in Lilongwe, consultant for the organisations, Ellias Ngalande, said the budget deficit is expected to widen in the aftermath of the cyclone.

Two weeks ago, Minister of Finance Sosten Gwengwe presented a budget statement, pegging the resource envelop at a sum of K3.87 trillion.

With a total revenue estimated at K2.55 trillion, the national budget this year faces a deficit of K1.32 trillion.


Gwengwe said the deficit will be financed through foreign borrowing amounting to K288.78 billion and domestic borrowing amounting to K1.19 trillion.

According to Ngalande, budget gap could rise from the indicated K1.32 trillion to K2 trillion.

“As a nation we should look at the realistic picture that is facing us. The budget currently has a K1.32 trillion deficit and I believe when the Minister was putting that together, Cyclone Freddy had not yet hit us. So this is going to impact us and already we can see the impact on energy.

“So, let’s just be honest about it. By the time we sort out the after effects of Cyclone Freddy, government would have dug deeper into its coffers and that can only translate into a higher deficit than the K1.32 trillion that’s currently in the budget. So that’s how I arrived at the conclusion. There was no any scientific analysis. The picture is clear,” Ngalande said.

Ngalande added that considering that Freddy has affected the agriculture and energy sector, industries are expected to suffer and this would also result into the increase of the deficit.

“We have to deal with it. So instead of cutting expenditure, we are going to add. I’m afraid to say, but we are back to square one and we have to start rebuilding,” Ngalande said when presenting the findings.

The analysis notes that the country is borrowing to service interests rates, for consumption and less investment, describing the budget as not being developmental-oriented.

Ecama Executive Director Frank Chikuta said the findings are a call for the government to start mobilizing resources such as grants to assist in various affected areas.

“Yes it is true that the deficit which is already high is likely to go up following the climatic shocks that the country has experienced.

“Now, to limit the increase in the deficit, government must demonstrate the need to make sure that resources are mobilized to help in some areas. If we get grants from well-wishers, then we may be able to limit the increase in the deficit,” Chikuta said.

Member of the budget and finance committee Ralph Jooma said government will have to go back to the drawing board and accommodate into the budget the expenditure required to repair the damage.

“It is not automatic however that these expenditures will cause the deficit to increase because the revenue side of the budget will also benefit from other sources including donations towards the cause.

“What is most important is transparency and accountability which unfortunately is usually elusive as government tends to display expenses and hide revenues,” said Jooma.

In an interview on Tuesday, Gwengwe said he would be appealing to lawmakers to consider channeling more resources towards supporting the survivors in the national budget.

Gwengwe admitted that the needs of the people affected by the cyclone are huge. He appealed to the private sector, donors and other players to step forward and respond to President Lazarus Chakwera’s declaration of state of disaster in the affected districts.

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