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WFP sees domestic revenue declining

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As Covid-19 pandemic is still gathering pace in the country, so too is continued contracting of the economy, estimates by the World Food Programme (WFP).

WFP estimates a 3.5 percent point decrease.

In a report; Minimum Expenditure Basket in Malawi: A look at Food Prices and Availability in times of Covid-19, the WFP said shrinking revenues are likely to lead into increased government borrowing to maintain some level of support to key sectors including health, education, and agriculture, consequently increasing the public debt.

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The report released on Tuesday, notes that local producers are likely to be among the first to feel the squeeze in the coming months.

“As the agriculture marketing season continues, weak demand for produce continues to be manifested through low prices. This is likely due to the depressed labour market resulting in relatively weak consumer demand as well as uncertainty vis-à-vis future profit prospects by the agro-industries manifested through a slowdown in economic activities as domestic and regional movements remain restricted,” reads the report in part.

Economist, Betchani Tchereni from the Polytechnic implored the government to effectively review the revenue structure.

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Tchereni said the situation might be attributed to a slowdown in the cross border trade due to travel restrictions.

Newly appointed Finance Minister, Felix Mlusu, said when presenting provisional budget yesterday that the government is expected to borrow K209.5 billion domestically.

In the four months provision budget Medf loans provision has been increased from the current K15.0 billion to K40.0 billion which will gradually be increased to K75 billion.

According to Mlusu with the increased allocation, the government is expected to support creation of 200,000 enterprises which are expected to create over 600,000 jobs.

At present, the government through the Malawi Vulnerability Assessment Committee is planning to conduct its annual household-level survey in July, with the aim of holding the Integrated Food Security Phase Classification.

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