Centre for Social Concern (CfSC) has cautioned that while the proposed K11 trillion 2026/27 National Budget signals strong intent to protect social sectors, its ability to meaningfully reduce inequality will depend on whether allocations translate into improved service delivery for the vulnerable populations.
The fiscal plan presented by Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha in Parliament in Lilongwe on Friday projects a fiscal deficit of nine percent of gross domestic product (GDP) in the fiscal year that starts on April 1 from 11.9 percent in the current fiscal year as government seeks to stabilise an economy burdened by public debt of K23.9 trillion, equivalent to 90.9 percent of GDP.
Interest payments alone are expected to consume K2.793 trillion in the next fiscal year.
Within the constrained framework, health receives K1.02 trillion, about 9.3 percent of total expenditure while agriculture is allocated K931.1 billion, roughly 8.5 percent.
The expanded Constituency Development Fund accounts for K1.145 trillion, more than 10 percent of total spending.
Allocation to education include K47.6 billion for free primary and secondary schooling and K42 billion for student loan.
In an interview on Saturday, CfSC economic governance officer Agness Nyirongo said the allocations demonstrate recognition that human capital development is central to reducing poverty.
She said: “The proposed budget demonstrates a clear commitment to social sector spending, particularly in health and education.
“Allocations towards free primary and secondary education, student loans and public health services reflect recognition that human capital development is central to reducing poverty and inequality.”
However, Nyirongo warned that funding levels alone do not guarantee impact.
“Whether these allocations meaningfully reduce inequality depends on their adequacy and effectiveness,” she said.
Nyirongo added that a stronger expansion of social protection programme could have reinforced the budget’s people-centred character.
“These measures provide immediate relief to households facing economic hardship and complement long-term investments in education and health,” she said, calling for greater emphasis on employment creation and improved accountability in decentralised funding.
While social advocates focus on distribution and adequacy, economists are examining the macroeconomic credibility underpinning the fiscal plan.
University of Malawi economics lecturer Edward Leman said the direction of policy matters most at this stage of recovery.
He said: “The deliberate effort to reduce the fiscal deficit and slow debt accumulation is important and carries strong potential for restoring confidence and beginning to stabilise the economy.
“While the reduction may not look dramatic in percentage terms, in absolute terms it represents a significant fiscal adjustment.”
With public debt stok already elevated, Leman said meaningful adjustments appear modest relative to the overall stock.
He cautioned against expectations of rapid public investment or growth.
“When a government is simultaneously trying to reduce debt and contain the deficit, fiscal space for expansionary spending is naturally constrained,” he said.
Leman noted that near-term growth-oriented investments are more likely to come from development partners and foreign direct investment rather than domestically financed public spending.
The proposed budget spending outlays is 30.2 percent higher than the allocation for 2025/26 and foresees a sizeable increase in development spending, which constitutes 30.9 percent of the total budget, a notable improvement from 20.9 percent in the financial year that ends on March 31.
In the proposed budget, statutory and mandatory expenditures on wages and salaries, interest payments and pension and gratuities are expected to take up 79 percent of domestic revenue, down from 98 percent in the current fiscal year ending March 31.
