Malawi expenditure rises by 4 percent
February 2014 government expenditures increased by about four percent to K37 billion from K35.6 billion in January although the International Monetary Fund (IMF) advised government to implement austerity measures.
The Reserve Bank of Malawi (RBM) February 2013 Economic Report released last week indicates that in contrast to a 28.9 percent decline in expenditures registered in January, the central government’s expenditures in the review month rose due to increases in external transfers and statutory expenditures.
External transfers increased by K2 billion, statutory expenditures rose by K1.3 billion while recurrent expenditures declined by K1.7 billion in February.
In January government suspended the payment of interest on foreign debt due to unavailability of funds.
But after the budget support suspension by the country’s major donors in November last year, the IMF advised the government to implement austerity measures—to spend within means. The donors have to date been reluctant to resume aid.
Earlier, while commenting on budget performance, Ministry of Finance spokesperson Nations Msowoya said government agreed with the IMF to implement a tight fiscal stance.
However, as the government expenditures rose, revenues for the month declined by 16.4 percent to K37.2 billion compared to the previous month.
The central bank has explained that the drop in the revenues was due to domestic revenues although grants increased.
Domestic revenues dropped by 26.4 percent to K30.4 billion from K41.4 billion recorded in January 2014 due to both tax and non-tax revenues.
Based on figures released by the Malawi Revenue Authority (MRA), the tax collector raised K28.6 billion, about two percent below the month’s projection. The tax authority blamed the underperformance on lower than anticipated taxes on income and profits.
RBM further indicates that non-tax revenues dropped marginally to K1.7 billion from K1.8 billion.
Due to the expenditure increases and the revenue drop, central government budgetary operations resulted into a shrinkage of surplus from K8.9 billion in January to K234.3 million in February.
According to the 2013/14 budget statement, Malawi’s total revenues and grants are expected to amount to K603.4 billion. Total domestic revenues are projected at K363.1 billion, representing 60 percent of total revenue and grants, while K240.3 billion are donor grants, representing 40 percent of total revenue and grants.
