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Treasury registers K88 billion deficit

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Betchani Tcheleni

The Ministry of Finance closed the month of March with a deficit of K88 billion, recently published Reserve Bank of Malawi (RBM) figures show.

The Treasury saw the deficit rising by 0.9 percent in March 2021 from 0.4 percent in the preceding month.

According to figures from RBM’s March 2021 Monthly Economic Review, total revenue and expenditure increased by 30.8 percent and 52.3 percent, respectively.

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During the period under review, the government’s revenue grew by K30.8 billion to K130.8 billion while its expenditure rose by K75.2 billion to K218.8 billion.

The increase in revenue is attributed to improved domestic revenues which outweighed the decrease in foreign receipts, as the latter registered a decline of K16.4 billion ($20.7 million).

“Domestic revenue rise was supported by both tax and non-tax revenues. Tax revenues increased to K93.4 billion in March from K74.4 billion in the preceding month while non-tax revenues edged up to K21.0 billion from the preceding month’s position of K4.8 billion,” the report reads.

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The 2020/21 national budget has been faced with myriad challenges including a weak fiscal environment leading to a wide deficit.

The financial plan has largely been characterised

by expenditure overruns and revenue shortfalls due to, among other things, effects of Covid pandemic.

Earlier this year, the central bank projected that the 2020/21 fiscal deficit would worsen further to an equivalent of 11.3 percent, or about K900 billion, of the gross domestic product (GDP).

The African Development Bank, on the other hand, projected Malawi’s fiscal deficit to widen to 10.2 percent or about K820 billion of GDP in 2021. This could see the debt-to-GDP ratio rising to 66 percent in 2021.

Reacting in an interview, economist from the Malawi University of Business and Applied Sciences Betchani Tchereni rated the trend as worrisome.

He urged the government, through the Malawi Revenue Authority to intensify revenue collection.

“It is encouraging that we have seen MRA pouncing on people who are suspected to be invading tax because we believe that there are a lot of people in Malawi who were supposed to be paying tax but they are not,” he said.

National Planning Commission Communications specialist Thom Khanje said in a separate interview that, in line with aspirations embedded in Malawi 2063, the country has capacity to manage the gap between revenue and expenditure.

“The Mw2063 proposes various innovative models of financing national projects other than borrowing which include, but are not limited to, public private partnerships, build, operate and transfer, pension funds, venture capital, contracting, grants, and concessional loans,” he said.

Finance Minister Felix Mlusu is on Friday expected to table to Parliament the 2021/22 national budget.

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