Statutory and other mandatory expenditures continue to choke the implementation of Malawi’s national budget as they take up 99.74 percent of domestic revenue pegged at around K4.5 trillion, fuelling fiscal strain.
This represents a rise from the 93 percent in the past four fiscal years, according to a report of the Budget and Finance Committee of Parliament.
Statutory expenditure also called rigid expenditure includes compensation of employees, interest on debt, wages and salaries, pension and gratuity and subventions.
The committee’s report, which was presented in Parliament on Monday by its chairperson Sosten Gwengwe (Malawi Congress Party) in response to the 2025/26 Mid-Year Budget Review Statement, indicates that statutory expenditures alone make up 32.34 percent of the revised budget pegged at K8.6 trillion and 41.7 percent of recurrent expenditure at K6.7 trillion.
Reads the report in part: “The debt service burden has become increasingly oppressive, with the current public debt interest charges being projected at K2.271 trillion.
“As an increasingly large share of government revenue is absorbed by debt servicing obligations, fewer resources remain for critical sectors such as health, education, social protection and agriculture. This crowding-out effect weakens the country’s ability to invest in human capital, undermining service delivery and exacerbates poverty and inequality.”
The 2025/26 proposed revised National Budget shows that total expenditure is projected to increase in the 2025/26 revised budget by K512.56 billion, rising from the approved budget of K8.07 trillion to K8.6 trillion revised estimate, representing a 6.35 percent increase.
Among others, there is a 6.4 percent upward revision of wages and salaries by K98.5 billion from K1.5 trillion to K1.6 trillion while payments on debt were revised upwards by K100 billion from K2.2 trillion to K2.3 trillion.
Ironically, development expenditure has been cut by K89.9 billion, declining from K2.016 trillion to K1.926 trillion.
In an interview yesterday, Scotland-based Malawian economist Velli Nyirongo observed that when a country allocates a large share of revenue towards recurrent and statutory obligations, including wages, interest on debt and pension payments, there is little left for infrastructure, development projects or essential social services.
He said this imbalance inhibits economic growth and leaves limited fiscal space to respond to economic shocks or invest in long-term development.
Said Nyirongo: “As debt servicing now consumes half of domestic revenues, the government faces tighter options for manoeuvre.
“If left unchecked, the growing wage bill, recurrent expenditure and debt servicing commitments may threaten government solvency and the sustainability of essential public services, hampering Malawi’s prospects for durable economic growth and poverty alleviation.”
In the 2025/26 Mid-Year Budget Review Statement, Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha said government’s wage bill has grown significantly, taking up 40 percent of the country’s domestic revenue.
He said government has put a moratorium on new recruitments except for key sectors, which will be done on case by case basis.
Said the minister: “Government will also conduct payroll audit and headcount for all public servants starting from December 9 2025.
“To minimise the gap between revenue and expenditure requirements, government will align funding with available resources rather than projected cash flows.”
The cumulative deficit for this fiscal year is wider than expected and by September, it had reached K2.037 trillion, up from a projection of K1.534 trillion.
