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Treasury moves to narrow deficit

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Milward Tobias

Minister of finance Sosten Gwengwe has said the Treasury is implementing a strategy aimed at reducing national budget deficits.

In the 2022-23 National Budget, for instance, the overall fiscal balance is estimated at a deficit of about K884 billion, which is 7.7 percent of gross domestic products (GDP).

The deficit is a percentage point lower than that of the 2021-22 financial plan.

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In an interview last week, Gwengwe said Treasury is moving to be narrowing the deficit each year.

“The aim is to reduce this financing gap by a percentage point every fiscal year until the gap closes in the medium-term. Closing the gap requires two things; firstly is to try and live within our means. This means cuts, expenditure controls, and efficiency in public service delivery.

“Second is to enhance revenue mobilisation. We intend to aggressively pursue the recently launched Domestic Revenue Mobilisation Strategy,” Gwengwe said.

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He added that a comprehensive tax stamp initiative is another way of increasing collection as it helps curb smuggling.

Malawi University of Business and Applied Sciences Associate Economics Professor Betchani Tchereni described the intention as good, saying debt levels are becoming unsustainable.

Director for Centre for Research and Consultancy Milward Tobias said efforts to achieve fiscal balance are commendable.

“The minister announced comprehensive expenditure control measures in his budget statement. The Revenue Mobilisation Strategy also aims at increasing domestic revenue. If these are implemented, it is very possible to reduce budget deficit without compromising on service delivery,” Tobias said.

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