Reserve Bank of Malawi data shows that government’s budget operations recorded a K679.4 billion deficit in the first half of this fiscal year, but economic experts fear the deficit could swell even more in the second half.
During the first six months of this fiscal year from April to September, expenditures which increased to K2.947 trillion outweighed revenues recorded at K2.25 trillion comprising K1.52 trillion domestic revenue and K727.8 billon grants.
The RBM Monthly Economic Review for September 2024 shows that the highest revenues were collected in July at K516.2 billion, the only month which saw government achieving a budget surplus of K31.2 billion.
Apart from July, the rest of the months recorded deficits with the highest recorded in August at K189.2 billion while in September, the deficit slightly eased to K149.6 billion.
Reads the report in part: “Central government’s total revenues and expenditures were recorded at K299.8 billion and K449.4 billion, respectively.
“This culminated in a deficit of K149.6 billion, an improvement from a deficit of K189.2 billion recorded in the preceding month. However, the outturn was a deterioration compared to a deficit of K35.5 billion recorded in September 2023.”
During the presentation of the 2024/25 National Budget in Parliament on February 23 this year, Minister of Finance and Economic Affairs Simplex Chithyola Banda projected the overall deficit at K1.43 trillion, which is 7.6 percent of gross domestic product (GDP).
“This deficit will be financed through domestic borrowing amounting to K1.28 trillion, representing six percent of gross domestic product and K150 billion foreign borrowing,” he said.
In an interview yesterday, economist Bond Mtembezeka, who is Business Partners International country manager, said the revenue side has been less satisfactory in the first half.
He said there is likelihood of increased spending obligations in the second half.
Said Mtembezeka: “In the latter part of the year such expenditure usually accelerates. It’s not surprising that the revenues are lower than expected as economic growth is slower than projected and Malawi Revenue Authority has missed a few targets.”
Mtembedzeka has advised government to revisit its expenditure lines and introduce measures to boost revenues in the second half to keep within budgetary targets
In a separate interview, financial expert Brian Kampanje said performance is fairly well as Treasury is expecting direct budget support from the European Union to cushion the deficit from ballooning in the second half.
Earlier, Secretary to the Treasury Betchani Tchereni said the 2024/25 budget was formulated in the way that the borrowing is meant for development projects unlike in the past where the country was borrowing for consumption.
The K5.9 trillion budget is equivalent to 31.9 percent of GDP and out of the total expenditure, recurrent expenses are projected at K4.21 trillion.
