Treasury recorded a deficit of K79.8 billion in its budget operations in the third quarter (January-March) of this fiscal year, figures from the Reserve Bank of Malawi (RBM) show.
Figures contained in the March 2018 Monthly Economic Review show that Treasury recorded a deficit of K13.9 billion in January while in February and March, the deficits were recorded at K39.6 billion K26.3 billion, respectively.
In contrast, total expenditures in March 2018 registered a decrease of K4.5 billion to K108.8 billion compared to an increase of K12.9 billion to K113.3 billion in February 2018.
According to the report, on an annual basis, expenditures recorded a growth of 18.9 percent from a total of K91.5 billion mobilised in March 2017.
On the other hand, total government revenues in March rose by 12.1 percent to K82.5 billion.
The outturn was a turnaround following a drop of 14.9 percent in February 2018.
Following the approval of the International Monetary Fund (IMF) three-year $112.5 million (K82 billion) Extended Credit Facility (ECF), the global lender advised fiscal and monetary authorities to contain budget deficits, which increased in the first half of 2017/18 fiscal year due to revenue shortfalls and spending overruns.
IMF resident representative Jack Ree cautioned authorities last month that if left unchecked, this could result in loss of confidence from the donors and the private sector.
In its 2018 Economic and Fiscal Policy Statement issued by the Ministry of Finance, Economic Planning and Development, Treasury said it has deployed strong remedial measures to contain widening deficit in the 2017/18 financial year.
“The measures underpin the mid-term revised budget which envisages reducing some budgeted expenditures,” reads the statement in part.
Economist Gilbert Kachamba earlier said too much wastage of resources make it difficult to contain fiscal discipline which he said is a big challenge.
“We need to have strong control measures in terms of government expenditure. It is unfortunate that Malawi Revenue Authority is missing the targets as this will affect government operations to some extent
“The economic and business environment is not good as some are taking tax evasion and avoidance as an option, which is a bad thing,” he said.
Minister of Finance, Economic Planning and Development Goodall Gondwe while admitting the challenges government is facing on meeting its expenditure due to poor revenue collection, said fiscal authorities will work on how best to maintain fiscal discipline to avoid fiscal overruns. n