Revenues decline amid rising fiscal deficit
Revenues collected by Treasury declined by K28.9 billion to K217.7 million in August 2023, representing a 11.7 percent fall, published Reserve Bank of Malawi (RBM) data shows.
The decrease, primarily driven by a 20.8 percent (K48.9 billion) decline in tax revenues, comes in the wake of a widening fiscal deficit recorded at K97.1 billion during the month under review.
Reads the RBM analysis in part: “The central government total revenues and expenditures in August 2023 were recorded at K217.7 billion and K314.9 billion, respectively.
“This resulted in a deficit of K97.1 billion compared to a surplus of K20.7 billion in July 2023 and a deficit of K44.9 billion recorded in August 2022.”
Fiscal deficit—a situation when a government’s total expenditures exceed the revenue it generates, excluding resources from borrowings— has become a norm as the government has consistently reported deficits in its financial plans.
Meanwhile, in the current budget, Treasury has projected a fiscal deficit of K1.3 trillion, an equivalent of one-third of the K3.87 trillion 2023/24 National Budget.
At K1.3 trillion, the fiscal deficit is 8.7 percent of gross domestic product and below the recommended threshold of three percent.
The deficit, which counters one of the budget objectives of containing the deficit, is also coming on the back of rising public debt, now at K8.3 trillion as at December 2022, with interest payments pegged at K917.9 billion.
Earlier, economic analyst Bond Mtembezeka urged local authorities to “tame borrowing and strengthen the resource envelope by among other things, implementing effective tax policies and widening the tax base”.
