The National Planning Commission (NPC) says trimming development budget compromises efforts to lay foundation for sustainable long-term growth and runs counter to aspirations outlined in Malawi 2063 (MW2063), the country’s long-term plan.
NPC director general Thomas Munthali, whose organisation is the lead agency for MW2063, said this following Treasury’s decision to reduce the 2024/25 fiscal year’s development expenditure to K1.58 trillion from the approved K1.77 trillion due to contractual bottlenecks. The cut comes six months after Treasury adjusted the development
expenditure by 63 percent from K1.08 trillion the previous financial year, although pressure to increase existing construction contract prices following last November’s 44 percent kwacha devaluation may also have spurred the jump.
In an interview on Friday, Munthali said the cut in development budget has been a recurring challenge for years and is cause for worry.
He said: “We should be a learning nation. What we need is a strong tracking and accountability mechanism that Treasury and Parliament, especially through the Budget and Finance Committee, needs to enforce with implementing ministries, departments and agencies and partners.
“It will not help to have on paper a national budget that points in the right direction with one of the highest development budgets only to revise it downwards or even reallocate to consumption because of slippages in implementation.”
In his 2024/25 Mid-Year Budget Review Statement presented in Parliament last Wednesday, Minister of Finance and Economic Affairs Simplex Chithyola Banda said in the first half of this fiscal year, the budget line underperformed by 25.1 percent and 57.4 percent on domestically and foreign financed components, respectively. The development expenditure amounted to K438.8 billion, out of which K143.6 billion is domestically financed and K295.2billion is foreign financed.
Chithyola Banda told The Nation on Thursday that the situation would improve in the second half of the year as government expects to manage inflation and ensure fiscal discipline.
He said Treasury also had to adjust budget projections to manage the fiscal deficit and balance accounts.
“We are confident that we will continue to make progress on critical infrastructure that will support economic growth in the long-term,” he said.
Treasury expects a decrease in the estimated fiscal deficit from K1.45 trillion, or 7.7 percent of gross domestic product (GDP), to K1.41 trillion or 7.5 percent of GDP in the current financial year.
Mzuzu University economist Christopher Mbukwa said in an interview yesterday that the expectation is to see the development budget growing because it is a catalyst for future growth.
“It is a concern whenever there is a cut on the development budget,” he said.
Malawi’s public investment in infrastructure has been negligible in the past two decades, according to the World Bank
