Treasury deficits continue to pile

Treasury continues to record deficits in its budgetary operations with the latest being a K13.3 billion deficit recorded in December 2018, published Reserve Bank of Malawi (RBM) figures have shown.

However, the deficit incurred is an improvement of a deficit of K54.3 billion recorded in November 2018, the RBM  December 2018 Monthly Economic Report shows. 

Fiscal deficits are projected to rise

The development follows a decline in total government revenue by K2.9 billion to K89.8 billion from K92.7 billion recorded in November 2018.

However, on an annual basis, government revenues increased by K15 billion from K74.7 billion realised in a corresponding month in 2017.

Reads the report in part: “Domestic revenues amounted to K83.1 billion which represented a decline of K2.5 billion due to a K1.8 billion decrease in non-tax revenue coupled with K640.9 million decreases in tax collections. The decline in non-tax collections largely emanated from a K1.1 billion drop in departmental receipts.”

The growing deficits incurred by Treasury have over the months been an issue of concern with local economic think-tanks saying it is likely to affect other budget lines.

Figures from the Central Bank show that in the six month period to December 2018, Treasury has posted four deficits and two surpluses.

Economist Gilbert Kachamba observed that there is too much wastage of resources which makes it difficult to contain fiscal deficits which he said is a big challenge.

“We need to have strong control measures in terms of government expenditure. It is unfortunate that MRA [Malawi Revenue Authority] is missing the targets as this will affect government operations to some extent, the economic business environment is not good as some are taking tax evasion and avoidance as an option,” he said.

On his part, Chancellor College economics professor Ben Kaluwa noted that with the growing deficits, pressure is now on government to spend more on servicing

 debt, infrastructure as well as providing basic services, a situation he said can be contained by doing a cost–benefit analysis.

But Minister of Finance, Economic Planning and Development Goodall Gondwe has, however, insisted that he would still rein in on over-expenditure to keep the national budget in check, saying that is why government has in place strong policies to balance the budget.n

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