Budget to rise to K743 billion
This year’s national budget is expected to rise to K743 billion (US$1 790 361 446), a 16 percent jump compared to the previous K640 billion (US$1 542 168 675) and government has said it is experiencing problems preparing it.
Speaking during this year’s first pre-budget consultations meeting held at Hotel Victoria in Blantyre yesterday, Minister of Finance, Economic Planning and Development Goodall Gondwe said the government is grappling with a number of issues in the preparation of the budget, including a domestic debt of K340 billion (US$819 277 108), payment arrears of K173 billion (US$416 867 469) and aid suspension.
He said the initial budget figures provide for K665 billion with donor support from some partners including the European Union (EU), the World Bank and the African Development Bank (AfDB) of about K43 billion.
Explaining how government intends to finance the widening fiscal deficit, Gondwe said it would lean more towards external borrowing.
However, he did not say whether Malawians should expect an increase in taxes or introduction of new ones, arguing the budget figures have not been presented to Cabinet.
“We hope that some of the donors will support us. We are also looking at donors providing some support to some of the activities without directly supporting the budget. If the resources are tight we will have to select some activities that will not be carried out,” said Gondwe without singling out the activities that may suffer.
He, however, emphasised that Malawians should expect a normal budget with a development budget of about K162 billion.
Gondwe also pointed out that the administration of the Farm Input Subsidy Programme (Fisp) will be moved to the Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM) which will lead into an expenditure of K50 billion, a cut from the previous K60 billion.
But a Chancellor College professor of economics Ben Kaluwa, commenting on the budget during the meeting, said Malawi’s economy is stressed.
“The economy is under unnecessary stress because the government is patronising through subsidies. The government is willing to do for people what they themselves are able to do on their own,” said Kaluwa referring to Fisp.
Providing input to this year’s budget, Institute of Chartered Accountants in Malawi (Icam) chairperson of taxation committee Andrew Chioko suggested that the pay as you earn (Paye) free tax band be increased to K35 000.
Said Chioko: “Although we would want a higher free tax band we are aware of the implications on the tax base. We, therefore, suggest that authorities should increase the tax base by bringing in more taxpayers.”
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) public private sector dialogue manager Hope Chavula said the country’s economy rests on weak fundamentals, including high interest and inflation rates, and volatile exchange rates and supply which have to be looked at seriously.
The danger for the Malawi economy is that the same policies are just being recycled without any target operating model (TOM) framework. The strategic vacuum in policy conception and implementation is a wide spread epidemic across all parties. The consequence of which is stagnating economy that offers no hope, no relief and no future for Malawians. 50 years of stagnation and another 50 years promises the same unless Malawi changes course….!
I will not be persuaded to point fingers at only political party but all of them have failed to provide solution based leadership to lift the country out of this Malthusian stagnation. Ego aside, it is time people came clean and admitted to Malawians that “Look people, I haven’t a clue on how to develop this country”. Malawi and Africa have been duped to rely on misguided development economics to move the country/continent to the next level. It is time the country sought a solution. Whatever is being tried has been tried. Everyone is familiar with what honourable ministers are able to deliver to the country because they have done their best before and that best did not shift a single digit in national GDP to achieve even a misery $10bn but just lingered in the sub $5bn. I am sick and tired of seeing the Malawi GDP trending along a constant horizontal linage… going no where but stuck in Malthusian poverty trap epoch.
There is a solution….The Malawi Economy can fly to $100bn GDP…10million jobs can be created, Export of over $100bn is within our reach, price stability of 2% inflation is feasible and University in every district is feasible. Unfortunately that solution is here with me in front of my desk. Do not settle for less Malawians!!