Statutory expenditures have consumed an average of 93 percent of domestic revenue over the past four fiscal years, published World Bank data shows.
This, according to economic commentators, deprives Malawians of development and public services.
According to the World Bank, a large share of statutory expenditure, also called rigid expenditures, includes compensation of employees, interest, pension and gratuity and subventions which are eating into domestic revenue, with debt-service obligations alone rising from 28 percent of domestic revenue in 2020/21 financial year to an estimated 43 percent in 2024/25 financial year.
In an interview yesterday, former finance minister Joseph Mwanamvekha said this means development projects and services to critical sectors will have to be accommodated within the remaining balance of seven percent of the budget.
He said: “This is a serious matter and is not healthy as it deprives Malawians of development and public services.
“This is the reason why you don’t see development taking place in almost all sectors and public service has been completely crippled.”
On his part, development economist Frederick Changaya observed that given the situation, should tax revenues decline below government projections, Treasury will be forced to borrow more.
“Being almost 100 percent it means we have zero space for fiscal policies and policy instruments that can be deployed in response to some economic shocks and stressor.”
Changaya said failure to improve on domestic revenue mobilisation could breed financial limitations for essential expenditure lines such as public health.
Speaking separately, socio and economic commentator Milward Tobias said with limited fiscal space for investment in other crucial areas and financing of development projects, development is at the mercy of cooperating partners, which can be unpredictable.
Said Tobias, who is also independent presidential candidate: “This situation is man-made. Economic mismanagement has seen the country on a sharp rising public debt trajectory.
“Underpinning this situation is the fact that economic growth has stunted; hence, revenue collection base has stunted too.”
Treasury data shows that budget statutory obligations have risen from K445.6 billion in the 2014/15 financial year to K2.1 trillion, which is almost half the K4.33 trillion 2023/24 National Budget.
Speaking during the 2025/26 Pre-Budget Consultations, Minister of Finance and Economic Affairs Simplex Chithyola Banda said “there are several areas of production such as mining, carbon credit markets, labour export and diaspora investment that we will need to explore as potential sources of revenue”.
Malawi’s public investment in infrastructure has been negligible in the past two decades, averaging about 4.18 percent over a 20-year period between 1998 and 2017, according to the World Bank.
At 4.18 percent, this is lower than Mozambique at 10.7 percent, Zambia’s 4.82 percent and Tanzania at 4.21 percent.
Statutory obligations entail institutional, legal, or contractual requirements or other constraints that limit policy maker’s ability to alter the size and composition of the budget, at least in the short term.
