The Budget and Finance Committee of Parliament says it has been vindicated when it queried the Ministry of Finance, Economic Planning and Development to justify the seven percent Gross Domestic Product (GDP) projection for this year.
Minister of Finance, Joseph Mwanamvekha announced in his 2019/20 National Budget Statement to Parliament that the economy would grow by seven percent up from five percent GDP growth last year.
The committee indicated it was not possible for the country to achieve such growth given the prevailing economic conditions which have been marred by political protests, corona virus, pandemic and hunger, which have negatively impacted on local business performance.
The comments from the committee follow a latest Financial Stability report released by the Reserve Bank of Malawi in which government has revised GDP projections downwards to 5.1 percent.
In an interview on Thursday, Budget and Finance Committee of Parliament chairperson Sosten Gwengwe said the committee feels vindicated and advised Treasury to be practical when presenting figures in Parliament.
Gwengwe said the Committee queried the seven percent growth rate because they had already seen what is happening on the economic ground.
He reminded Treasury that a budget should not be a political manifesto, and advised authorities that they should not politicise budget figures, but that they must do a thorough job and be able to tell Malawians expectations that are genuine.
“When they gave the GDP growth we queried them that it was not possible to achieve it, so they need to be serious because these figures determine the livelihood of Malawians. When we query them we do so based on facts not for political reasons.
“When they know that some of these things are not obtainable they should be frank with parliament. We queued them even on revenue projections. That they will not be able to meet targets because of the economic slowdown but they went ahead to present them,” said Gwengwe.
Earlier, economic experts also doubted government’s economic growth projection of seven percent, saying it was unrealistic given the current low economic performance and natural disasters.
Last month when experts expected a downward revision of growth, Mwanamvekha remained firm during presentation of the revised K1.84 trillion 2019/20 budget that the economy will still grow by seven percent.
According to the minister, inflation will average eight percent to go down to seven percent in December, coupled with buoyant exchange rate at K750 to the dollar and policy rate at 13.5 percent.
Said Mwanamvekha: “Government’s overarching objective in the 2019/2020 budget is to leverage on the macroeconomic stability to tackle five key issues namely: economic growth; job creation; economic empowerment; sustainable debt management and infrastructure development.
“Alongside this objective, government will continue to focus on macroeconomic stability as it is a necessary condition for the attainment of inclusive, resilient and sustainable growth.
But Catholic University Dean of Social Sciences Gilbert Kachamba said it was difficult to achieve seven percent growth rate of the economy as there are a lot of issues surrounding our economy that are hindering growth.
“The political impasse is contributing substantially to slow growth. Natural disasters and poor agricultural output and prices are also affecting the economy negatively.
“Our heavy reliance on agriculture will not take us to that growth rate. Something different must be done and must be done quickly,” he said.
Last month the World Bank also projected that the Malawi economy will grow by 4.8 percent while the African Development Bank projected it will grow by 5.2 percent.