All eyes will be on Finance Minister Simplex Chithyola Banda Friday afternoon as he presents the 2024-25 National Budget statement in Parliament.
Chithyola Banda has a tough task of matching the words of President Lazarus Chakwera when he delivered the State of the Nation Address (Sona) some 14 days ago with budgetary allocations.
In the Sona, Chakwera emphasised that economic recovery had started and that there was need to build on progress recorded so far.
Crucial will be to see whether the minister will pay enough attention to the productive sector to jumpstart the economy.
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Over the past couple of years, the local economy has wobbled, registering unimpressive growth figures mainly due to weak production of almost everything, a development that has led to huge shortages.
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Attention to the productive sector should definitely induce some cuts in the consumptive sector which is a gamble Chithyola Banda may not be willing to take with just 16 months to the September 2025 elections.
Business captains will be keeping their fingers crossed, praying that Chithyola Banda will announce a favourable taxation regime that would allow them to produce more and create the much-needed jobs.
Equally interesting will be to see as to whether the various financial allocations will be in tandem with the dictates of Malawi’s long-term development plan Malawi 2063 (MW2063).
But that will not come easy as even before the budget statement is read out, about K2 trillion is already committed to statutory obligations such as wages and salaries; debt repayment and pensions.
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This surely leaves Chithyola Banda with very limited to no fiscal space to juggle around figures.
Equally interested will be development partners who have in recent months started opening their budget support taps to Malawi in the aftermath of the country getting back the Extended Credit Facility programme with the International Monetary Fund.
In an interview Thursday, Malawi Economic Justice Network (Mejn) Executive Director Bertha Phiri said her organisation will be interested to see an alignment of the national budget to the Sona and also the country’s national development agenda.
“We would like to see clear-cut alignment of the budget to the Sona, but also the Medium Term Implementation Plan…
“Malawians would like to appreciate the economic performance reporting with parameters that are befitting to the ordinary Malawians. The whole question of how the economic growth impacted the lives of Malawians in real terms and not only paper analyses,” Phiri said.
She added that Mejn would be willing to see the recapitalisation of critical institutions such as the Malawi Development Corporation and the Agricultural Development and Marketing Corporation.
Scotland-based economist Velli Nyirongo said he expects the budget to aim at achieving three main objectives of economic growth, social development and fiscal sustainability.
“To foster growth, the budget proposes to invest in infrastructure, agriculture, manufacturing, tourism, technology and SMEs. To promote social development, the budget allocates resources for education, healthcare, social protection and climate change adaptation and mitigation.
“To ensure fiscal sustainability, the budget outlines measures for debt management, tax system reform, public expenditure management, and anti-corruption. We hope the budget reflects the government’s vision to transform Malawi into a prosperous, inclusive, and resilient nation,” Nyirongo said.
On his part, Blantyre-based economist Marvin Banda said no single budget can cure the problems in the local economy.
Banda said growth requires sustainable performance on the key areas, enablers and pillars in MW2063.
“Industrialisation in an area we have to focus on. Close collaboration with the Malawi Bureau of Standards in order for the nation to produce value added products to supplement the efforts in the ATM strategy. The allocation for the 23-24 budget was a meagre 0.9 percent.
“The budget should also aim to reduce the fiscal deficit because if this trend continues, Malawi’s own history has shown that it spurs growth by allowing the banking sector to maintain capital space that it can then make available to the private sector which can then spur this collective growth the nation craves,” Banda said.
He added that the mining sector, as Chakwera alluded to in the Sona, would quickly help heal the wounds of the nation if well harnessed.
“The rutile mining project through the Malawi Mining Company in the Public Private Partnership collaboration should receive important support if we are to transition into a dynamic economy along with exploitation of the medical cannabis and hemp,” he said.
