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Business as usual won’t help—NPC

The National Planning Commission (NPC) says a “business as usual” approach in recovering the country’s economy will not help, urging Treasury to focus spending on productive sectors to enable the country generate enough revenue.

Speaking in an interview on the sidelines of the 2025/26 Pre-budget Consultations in Blantyre on Friday, NPC director general Thomas Chataghalala Munthail said with grants underperforming by 61 percent in the current fiscal plan, doing business as usual will not help matters.

He said: “In the last budget review, we realised that grants that were coming from development partners underperformed by 61 percent. The resources we were expecting never materialised.

“In so doing, we ended up going into debt. If we go back to business as usual, where we spend the little we have, it is unlikely that we will get out of debt and be able to generate our foreign exchange and the fuel challenges will continue.”

Munthali, whose organisation oversees the implementation of the country’s long-term development strategy Malawi 2063 (MW2063), said there is a need to provide space to the private sector, which is operating at 75 percent capacity utilisation, to unlock its potential.

He said government should act as a catalyst for investments to create income, not just for government revenue, but for wealth creation, which is in line with MW2063.

Munthali said if the private sector is not given space to thrive, Malawi will continue to rely on donors and grants, which is not sustainable in the medium to long-term.

At mid-year, Treasury cut the 2024/25 fiscal year’s development expenditure to K1.58 trillion from the approved K1.77 trillion due to contractual bottlenecks.

The cut came six months after Treasury also adjusted the development expenditure by 63 percent from K1.08 trillion the previous financial year despite pressure to increase existing construction contract prices following the 44 percent devaluation of the kwacha, which could have spurred the jump.

On the other hand, the mid-year outturn for grants was K223.4 billion against a projection of K584.2 billion, representing a variation of 61.8 percent, according to the Mid-Year Budget Statement.

Of the K223.4 billion outturn, K4.3 billion was from foreign governments and K219.1 billion from international organisations.

Minister of Finance and Economic Affairs Simplex Chithyola Banda was hoping that at mid-year, performance of grants would improve in the second half as some disbursements had materialised after the reporting period.

By the end of the 2024/25 financial year, Treasury projects grants to increase by K72 billion on account of an increase in current grants from international organisations.

Data from Oxfam in Malawi shows that the relative contribution of total grants has been declining from a peak of 38 percent of the budget in the 2007/08 financial year to 11 percent in the2023/24 financial year.

This is an indication that the potential impact of budget support has waned as it has long been volatile and trending downward relative to government expenditure needs, according to economists.

Speaking during the 2025/26 pre-budget consultations on Friday in Blantyre, Chithyola Banda observed that to achieve the country’s long-term goal of an inclusive, wealthy and self-reliant nation, Malawi need to continue promoting growth policies guided by MW 2063.

“This, therefore, implies that our budget will continue to strengthen prudent fiscal management, improve domestic resource mobilisation and ensure that we achieve debt sustainability in the medium to long-term,” he said.

Chithyola Banda conducted pre-budget consultations in Lilongwe, Mzuzu and wound up in Blantyre on Friday to solicit input for the budget.

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