Treasury outlines key budget risks
By William Kumwembe:
Finance Minister Joseph Mwanamvekha has outlined key risks facing the 2019/20 National Budget, saying it would require concerted efforts in minimising possible pressure points.
Mwanamvekha was speaking in Blantyre on Friday during the final round of the 2019 to 2020 pre-budget consultation meeting.
In his presentation to stakeholders, Mwanamvekha outlined fiscal pressure, unpredictability of budget support, procurement hurdles and poor public finance management in some District Councils and government departments among challenges facing the budget.
Mwanamvekha said, despite the economy making remarkable progress in the economy, the budget continues to experience fiscal pressure.
In the 2018/19 fiscal year, revenues did not perform as expected largely on account of unsatisfactory performance of the tax revenues and parastatal dividends.
Grants also underperformed on account of non-disbursement of projected budget support.
The revenue underperformance greatly affected effective implementation of the budget, considering the existence of too many competing needs against limited resources.
Mwanamvekha said unpredictability of budget support also continued to put pressure on the budget, especially where such revenues are programmed as part of the budget.
As a result, the government has had to resort to domestic borrowing, thereby increasing public debt.
Mwanamvekha said the government would, however, enhance its effort in mobilising local and foreign resources in meeting the budget requirements.
“Specifically, the Malawi Revenue Authority is expected to enhance its enforcement efforts, monitor taxpayer compliance through audits, automation of domestic taxes through the implementation of the Integrated Tax Administration System and continuous focus on integrity issues.
“Policy and institutional reforms in State-owned enterprises will also continue being implemented in order to improve their performance,” Mwanamvekha said.
He said the next budget would focus on promoting domestic and foreign investments, diversification in agriculture, promotion of manufacturing and value addition, investments in the energy sector and ensuring value for money.
In its presentation, Malawi Confederation of Chambers of Commerce and Industry (MCCCI) outlined weak economic growth, lack of fiscal consolidation measures, high and increasing public debt levels, higher interest rates and declining investment expansion among major constraints to sustainable economic growth for the country.
MCCCI Head of Real and Macroeconomic Policy, Hope Chavula, said solutions to these challenges included prioritisation of expenditure in areas that would support private sector growth and provision for right fiscal and economic incentives
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