Government reports K14bn deficit in January
Treasury recorded a deficit of K13.9 billion in its budget operations in January this year, figures published from the Reserve Bank of Malawi (RBM) show.
However, the figures show that the excess in expenditure over income recorded in January is an improvement on a deficit of K16.8 billion recorded in December 2017, according to the RBM January 2018 Monthly Economic Report published on Monday.
In contrast, in January 2017, central government budgetary operations recorded a surplus of K13.6 billion, representing a 0.3 percent of gross domestic product (GDP).
Ironically, revenue collection by Malawi Revenue Authority (MRA) in January rose by 15.8 percent to K86.5 billion, after a decrease of 6.7 percent to K74.7 billion recorded in the preceding month.
On a year-on-year basis, total revenues dropped by 6.5 percent from K92.5 billion recorded at the end of January 2017.
Reads the report in part: “The observed monthly increase in total revenues was on account of both domestic and foreign inflows. Domestic revenues increased by 13.3 percent to K78.9 billion, following another marginal increase of K0.3 billion to K69.6 billion recorded in the preceding month. Meanwhile, on a year-on-year basis, domestic revenues rose by 4.6 percent from K75.4 billion recorded in January 2017.
“The rise in domestic revenues during the month was on account of both tax revenues and non-tax revenues. Tax revenues increased by 11.8 percent to K74.7 billion while non-tax revenues rose by 49.5 percent to K4.2 billion in the reviewed month.”
In an interview on Tuesday, Economics Association of Malawi (Ecama) president Chikumbutso Kalilombe said there is need to make budgeting on the revenue side more realistic if the country is to avoid fiscal deficits.
Economist Gilbert Kachamba said too much wastage of resources makes it difficult to contain fiscal deficits which he said is a big challenge.
“We need to have strong control measures in terms government expenditure. It is unfortunate that MRA is missing the targets as this will affect government operations to some extent, the economic business environment is not good as some are taking tax evasion and avoidance as an option,” he said.
Chancellor College economics professor Ben Kaluwa said the pressure is now on government to spend more on servicing debt, infrastructure as well as providing basic services, a situation he said can be contained by doing a cost-benefit analysis.
Minister of Finance, Economic Planning and Development Goodall Gondwe earlier projected a deficit, including grants in 2017/18 fiscal year of 3.9 percent of GDP, an adjustment from 4.1 percent of GDP.
