Malawi Government budgetary operations opened the 2025/26 fiscal year with a K130 billion deficit in April as expenditure increased, leaving revenues insufficient to finance the fiscal plan, latest Reserve Bank of Malawi (RBM) data shows.
The April deficit is slightly below K152.9 billion recorded in March and K156.8 billion recorded in April 2024, according to the RBM Monthly Economic Review for April, but analysts have cautioned Treasury to be vigilant in the coming months as spending pressure will increase due to the September 16 General Election.
During the month under review, total revenue was recorded at K435.1 billion against expenditures at K565.5 billion, creating a deficit of K130.4 billion.
Reads the report in part: “Government expenditures increased by K67.3 billion or 13.5 percent to K565.5 billion in April 2025 from K498.2 billion in the preceding month on account of increases in recurrent and development expenditures. Specifically, recurrent expenditures grew by K32 billion or 7.8 percent to K442.3 billion.”
The revenues at K435.1 billion, increased by 26 percent from K345.3 billion recorded in March driven by increases in tax revenue and grants despite non-tax revenue declining by 19.3 percent to K53.1 billion, according to the report.
The April figures are the first official snapshot of budget execution for the new financial year, in which Minister of Finance and Economic Affairs Simplex Chithyola-Banda projected a deficit of K2.49 trillion or 9.5 percent of the country’s gross domestic product.
The deficit will be financed by K2.33 trillion domestic borrowing and K145.78 billion from foreign sources.
In an interview yesterday, financial expert Brian Kampanje described the performance as fairly well considering that the monthly deficit has dropped, but expects the situation to be temporary as election-induced government spending is likely to balloon the deficit in the coming months.
He said: “It is good news that the deficit appears to be within the reasonable margins as this will not force the government to procure more domestic debt to finance its expenditure, which is pushing the interest rates upwards and having a crowding out effect as banks are more keen to lend to the government and choke the credit ability for production of goods and services.”
Economist Bond Mtembezeka said in an interview that the revenue side has been less satisfactory in recent months.
He said the market expects increased government spending in the latter part of the fiscal year due to the forthcoming election.
Mtembezeka, who is Business Partners International country manager, said: “In the latter part of the year, such expenditure usually accelerates.”
Malawi Economic Justice Network executive director Bertha Phiri said in an interview yesterday that the budget did not provide strong measures that could contain budget deficit from worsening.
“The deficit is being financed by domestic borrowing so we will continue to dig a pit and also taking much more resources into servicing debt,” she said.
Former National Planning Commission director general Thomas Munthali is quoted as having said that the budget deficit and borrowing projections were inevitable.
