Budget will achieve objectives—Minister
Minister of Finance and Economic Affairs Simplex Chithyola-Banda has stood by his K5.9 trillion 2024/25 National Budget, saying he is hopeful it will achieve its objectives despite concerns from opposition parties and parliamentary committees.
Making his winding up speech in Parliament yesterday, the minister also directly responded to queries raised by opposition Democratic Progressive Party (DPP) and the United Democratic Front as well as the Budget and Finance Committee of Parliament and other cluster committees.
He allayed fears that the budget was based on “unrealistic and overly optimistic projections”.
Said Chithyola Banda: “It should also be noted that these assumptions are not static and were generated before the onset of the rainy season, therefore, the estimations underpinning the 2024-25 Budget are/were realistic and present a true reflection of the expected outcome.”
The minister’s response was an apparent direct reaction to a statement by DPP spokesperson on finance Joseph Mwanamvekha, a former minister of Finance, who said the government could not attain the envisaged growth considering that estimates from the Famine Early Warning System Network (FewsNet) and the World Bank projected a lower growth.
The two institutions projected that growth would be lower because erratic and harsh weather patterns caused by El Nino would reduce harvest in some parts of the country, particularly in the Southern Region.
Chithyola Banda expressed confidence that the measure the government has undertaken under the Domestic Revenue Mobilisation Strategy will boost revenue collection through improved and efficient tax collection systems such as use of tax stamps and improved compliance to value-added tax (VAT).
On the widening budget deficit, he said the government has brought down the deficit as a percentage of gross domestic product (GDP) by 0.9 percentage point from 8.5 percent to 7.6 percent. In nominal terms, the deficit has grown from K1.36 trillion to K1.43 trillion.
But the minister fell short of presenting fresh updates before the House on the debt restructuring negotiations which Malawi’s development partners say is essential to reducing the country’s debt burden, which has soared to K13 trillion or 84.8 percent of GDP.
Chithyola-Banda’s justification in the revenue projections on the budget coincided with an announcement by the Malawi Revenue Authority (MRA), a key implementer of the revenue strategy, that it would close the 2023/24 fiscal year with a surplus, thereby putting the country firmly on track to secure its revenue collection targets.
In an e-mailed response, MRA director of corporate affairs Steve Kapoloma said: “It is projected that MRA will collect around K2.20 trillion by the end of March 2024, closing the year with a surplus. It should be noted that despite initial concerns, the authority is on track to not only meet but exceed the set revenue target of K2.11 trillion, as well as the revised target of K2.18 trillion.”
However, the State-owned enterprises’ dividend payments to the government are projected to fall by 89 percent from K141 billion in the past financial year to K15 billion in the 2024/25 financial year
