The Ministry of Finance and Economic Affairs says it remains optimistic that ongoing fiscal reforms, particularly targeting domestic revenue mobilisation will deliver results.
At the heart of the reform strategy is the digitisation of the country’s tax and public finance management (PFM) systems.
The Integrated Tax Administration System (Itas), also known as Msonkho Online, is now fully operational and authorities have started the rollout of e-receipting and electronic procurement in government ministries, departments and agencies.
Ministry of Finance and Economic Affairs spokesperson Williams Banda said in an interview on Wednesday that the transition to digital systems is critical to improve revenue flows and accountability.
He said: “The game-changer is the e-payment systems, which will enable all components of our PFM framework to communicate with each other.
“The system alone cannot deliver results, but we also need a change in mindset. If people do not use it effectively, we simply revert to business as usual.”
Banda further pointed to the planned National Payment System, which is expected to strengthen interoperability Departmen of Immigration and Citizenship Services and the Directorate of Road Traffic and Safety Services.
He noted that clearing passport backlogs and automating services could unlock additional revenue through visa and passport fees.
Despite digitisation gains, progress on tax policy reforms has been uneven.
A 2023 proposal to standard-rate all vehicle imports faced strong resistance, with the Consumers Association of Malawi warning that it could “push small businesses out of the market”.
Another reform, repealing value added tax exemptions on building materials and construction services was initially scheduled for July 2024.
However, the Ministry of Finance last year indicated that the proposal had been sent to the Ministry of Justice and its current status remains unclear.
These measures were designed to expand the tax base and improve equity, particularly by reducing preferential treatment for politically connected individuals.
Speaking in an interview on Wednesday, Economics Association of Malawi president Bertha Bangara-Chikadza warned that internal resistance and lack of transparency continue to undermine the reform process.
“Lack of accountability and transparency undermines the efficiency of the systems and reforms.
“It is considerably hard to roll out systems such as Integrated Financial Management System if key members are not in support of the development.”
In an interview yesterday, Nico Capital chief executive officer Misheck Esau urged the government to expedite the digitalisation processes, saying they will improve revenue collection.
“The [integrated] systems are already there. It is just that the government has been late adopters. But it is a positive development that would bear fruit in the future,” he said.
In the K8.07 trillion National Budget, government projected domestic revenue at K5.58 trillion, with tax revenue estimated at K4.44 trillion.
The fiscal plan has a projected deficit of K2.49 trillion, representing 30.8 percent of the total budget, to be filled up by domestic and foreign borrowing.
Malawi’s reform blueprint also committed to enhancing fiscal transparency. A key pledge was to publish monthly unaudited expenditure reports generated via the Integrated
Financial Management Information System (Ifmis), beginning in October 2023.
Yet, no such reports have been uploaded to the Ministry of Finance’s website since that time. This apparent backslide has raised concerns within civil society and among development partners over the government’s commitment to openness and public accountability.
As the government works to realign its economic roadmap in the post-ECF era, the credibility of its reform agenda and its capacity to fund social and development priorities will hinge not only on what is planned, but also on what is implemented and sustained.
With public trust, revenue performance, and donor confidence all in the balance, the next phase of reform will test whether Malawi’s institutions can deliver results without the pressure valve of IMF oversight.
