Economists and consumer rights activists have said they expect Minister of Finance Felix Mlusu to come up with a balanced budget that focuses on Covid-19 recovery and stimulating the economy for citizens to participate in economic activities.
In separate interviews yesterday, the experts agreed that Mlusu faces hard choices to facilitate recovery and commit to fulfilling the Tonse administration’s campaign promises in the budget.
Economist Milward Tobias, who is executive director of Centre for Research and Consultancy, said expectations are high that Mlusu will present the first budget to start implementing Malawi 2063 Vision.
He said it was exciting to notice that President Lazarus Chakwera has already engaged an extra gear in his quest to diversify the economy by giving clear directives to responsible institutions.
Said Tobias: “Therefore, the public do not expect excuses. I expect that within the agriculture sector, we will begin to implement interventions that help increase productivity and commercialisation.”
In terms of public finance management, he said the expectation is that the Finance Minister should announce measures to deal with persistent audit queries and to spell out measures his ministry has put to reverse the declining trend of foreign exchange reserves.
“He must assure the nation that we will not get to the level of 2011 and part of 2012 when fuel and other supplies became scarce,” Tobias said.
He emphasised the need for an attainable budget as well as increased resource allocation to sectors with high job creation potential.
On his part, Malawi University of Business and Applied Sciences associate professor of economics Betchani Tchereni said he expects the budget to be a link between priorities and the Malawi 2063.
He said: “This is because we are looking at the Malawi 2063 Vision not just as a blueprint but the ambition that the young and old want to achieve. It will be suicidal to have a budget that does not speak to the aspirations of Malawi 2063.”
Tchereni also said the budget should also provide ways of Covid-19 recovery as the pandemic.
“We need to ensure that companies are back to their feet in various sectors such as tourism, manufacturing, trade and see to it that they are employing people because that’s the only way that people can participate meaningfully in economic activities,” he said.
Consumers Association of Malawi executive director John Kapito described the coming budget as “the toughest budget to ever be delivered by a Finance Minister”, considering the devastating impact of Covid-19.
He said: “The most difficult part will be to come up with a budget that will ease the economic pain being experienced by consumers as we have seen a sharp decline of people’s incomes as a result of a high cost of living due to rise of commodity market and continued weakening of the kwacha.
“I pray and hope that this new budget will not include the Affordable Inputs Programme. Irrespective of the economic and political advantages of this programme, Malawi cannot sustain it during this difficult period. Let us use what is available to improve our health and education sectors that have almost collapsed.”
Kapito advised Mlusu to prioritise improved electricity generation and clean water distribution and provide enough resources towards revenue collection.
During the pre-budget consultations, Employers Consultative Association of Malawi executive director George Khaki observed that most proposals are not considered.
“We need to look at how we build the economy back to normal by creating an enabling environment for businesses in the face of the Covid-19 pandemic,” he said.
The 2020/21 fiscal plan has a projected record deficit of K810.7 billion, representing 8.8 percent of the country’s gross domestic product.
The deficit, according to Ministry of Finance, is expected to be covered through foreign financing of K246.3 billion and the balance of K564.4 billion through domestic borrowing.
In its private sector proposals for 2021/22 National Budget, the Malawi Confederation of Chambers of Commerce and Industry called for a review of the tax policy to reduce some taxes to enable local industries to be competitive.
However, tax expert Emmanuel Kaluluma said certain expenditures are fixed, hence having government to lower taxes will mean reduced revenues for such costs.
In the second half, Treasury is projecting total revenue and grants at K875.8 billion of which K621.6 billion is domestic revenue and K254.2 billion are grants.