The Minister of Finance, Simplex Chithyola Banda on December 4, 2024 presented the 2024/2025 Mind-year budget review at Parliament in Lilongwe.
Chithyola- Banda said that in order to manage the fiscal deficit, there will be fiscal tightening measures that will shortly be announced through a government circular.
“Let me mention from the onset that this Midyear Budget is in itself an austerity budget. As such, considering the macroeconomic environment that we are in, we need to do things differently to allow our economy recover by sacrificing today for a better tomorrow,” Chithyola said.
According to Chithyola, the first half of the 2024-25 budget outturn was generally within the projected expenditure levels despite a number of macroeconomic challenges that affected revenue mobilization and impacted on expenditure.
Key highlights:
Performance of Revenue and Grants
· At mid-year total revenue and grants for the 2024-25 fiscal year amounted to K1.72 trillion against a midyear projection of K2.22 trillion
· Overall balance in the first half of the 2024-25 financial year is at K950.9 billion, against the projected K897.2 billion, representing a variance of 6 percent. This, the minister said is on account of lower than envisaged revenue collected in the first half coupled with higher than planned expenditures largely on compensation of employees
Projections for the second half of financial year
· Total revenue and grants are projected at K2.90 trillion of which, K1.88 trillion is domestic revenue and K1.02 trillion are grants.
· Total expenditure is projected at K3.36 trillion of which, K2.22 trillion is recurrent expenditure and K1.15 trillion is development expenditure.
Highlights on Key Expenditure Categories
Wages and salaries
· 2024-25 approved provision for wages and salaries has been revised upwards by K201.2 billion from K1.08 trillion to K1.28 trillion, representing an 18.7% increase. This is on account of full impact of the salary adjustment that took place in November 2023, in a bid to cushion public officers from the effect of the realignment of the Kwacha and recruitment of health workers and other officers in various MDAs, which took effect after the 2024-25 budget was approved.
Austerity/Reform measures
· Removal of Value Added Tax (VAT) waiver on motor vehicle imports for privileged individuals Government will remove Value Added Tax (VAT) waiver on motor vehicle imports for privileged individuals and organizations.
· Affected individuals with this measure include the State President, the Vice President, the retired Presidents and Vice Presidents, Cabinet Ministers, Members of Parliament, senior officials in the Judiciary including judges, senior government officials and senior military officials.
· Full Implementation of Electronic Excise Tax Stamps. They are designed to help the Malawi Revenue Authority (MRA) verify whether excise tax has been paid on excisable goods, such as alcoholic beverages, cigarettes, soft drinks, and bottled water
· Open a Voluntary Tax Compliance Window for motorcycle operators. To allow unregistered
motorcycles to be registered for a small fee. Designated registration sites will soon be announced by the MRA.
