Fourth-quarter opens with K46 billion deficit

Government has opened the fourth-quarter of 2023 with a fiscal deficit of K46.4 billion, representing a 30 percent jump from the K35.5 billion recorded in the preceding month.

Figures contained in the Reserve Bank of Malawi’s October issue of the Monthly Economic Review shows that the government revenues stood at K259.2 billion. Revenues improved by 18.1 percent from K168.8 billion recorded in September driven by a growth in domestic revenue.

Domestic revenues rose by K43.9 billion, representing a growth of about 24.3 percent.

On the expenditure side, government expenditures rose 19.8 percent to K305.7 billion in October from K236.5 billion the previous month.

The report reads: “[The increase in expenditure follows a K32.3 billion rise in recurrent expenditures and an K18.2 billion increase in development expenditures. Notwithstanding the increase in recurrent expenditure, interest payments declined by K12.7 billion to K56.2 billion during the period under review.”

Mzuzu University economist Christopher Mbukwa expressed concern that the protracted deficits will increase the country’s debt levels because the government will have to borrow more to finance the shortfalls in the budget.

He said in a WhatsApp response: “For Malawi, any level of borrowing at the moment contributes to an already high debt in the region of 73 percent of the GDP [gross domestic product]. That’s where the worry is. Our debt is already in distress so any addition to it, however small, is worrisome.”

Malawi is currently classified as a country in debt distress with the total public debt stock stood at K14.7 trillion or 76 percent of GDP, according to IMF data contained in the latest country report released last month.

In an earlier interview, economic analyst Bond Mtembezeka said it is common for a country to run fiscal deficits but what matters is how the government uses the funds to ensure that the deficits are “sustainable and impactful”.