The Reserve Bank of Malawi (RBM) figures show that Treasury’s mobilisation of revenue declined by 8.5 percent or K12 billion in May on account of reduced tax collections and grants.
In its May 2022 Monthly Economic Report, RBM said tax collections declined by 13 percent or K16 billion to K107.6 billion while grants declined by K490.6 million to K9.3 billion.
This is despite a rise in departmental receipts, deposits and reclaimed funds and miscellaneous deposits by 32 percent or K1.8 billion to K7.4 billion, 141 percent or K2.1 billion to K3.6 billion and K300 million to K306 million, respectively.
Reads the report in part: “Revenue mobilisation for the month of May decreased by 8.5 percent [K12 billion] from K140.7 billion collected in April 2022 but increased by 43.5 percent from K89.7 billion collected in the corresponding month in 2021.
“The decrease in total revenues follows an 8.8 percent [K11.5 billion] decline in domestic revenues and a five percent [K490.6 million] decline in grants.”
During the month under review, Malawi Revenue Authority (MRA) missed its target by eight percent or K9 billion when it collected K104.7 billion against a target of K113.7 billion.
MRA commissioner general John Biziwick said in a recent interview that among others, tax revenue mobilisation was being hampered by exemption of value added tax (VAT) for water and cooking oil as well as continued effects of foreign exchange shortages.
“Continued foreign exchange shortages have affected import duty, VAT and excise tax,” he said.
But the figures show that in the first quarter (April to June) of this fiscal year, MRA collected K355.1 billion in tax revenue, slightly missing the target of K355.6 billion by K536.01 million.
During the same period last year, MRA collected K302.1 billion, representing a growth of 17.52 percent from last year.
Data further shows that in April and June 2022, MRA beat its target by 105 percent and 102 percent, collecting K130.5 billion and K119.921 billion, respectively.
In May, however, MRA missed its target by eight percent by collecting K104.679 billion, a development that affected Treasury’s revenue mobilisation efforts.
Meanwhile, in the month under review, government expenditures declined by 17.9 percent or K47.9 billion to K219.9 billion from the K267.8 billion recorded in the previous month.
This was explained by a decline in both recurrent and development expenditures.
In the 2022/23 National Budget, Treasury projects a deficit of K884 billion to be financed through borrowing while interest payments alone stand at K524 billion and represent around 18 percent of total expenditure.
In the 2022/23 fiscal year, MRA projects to collect K1.5 trillion, an 18 percent increase from the previous year.
Minister of Finance and Economic Affairs Sosten Gwengwe said it will require strict fiscal consolidation measures to enhance revenue collection and manage expenditures.
The ministry is banking on the Domestic Revenue Mobilisation Strategy to boost revenue generation.