Economic commentators on Monday took turns to punch holes into the 2018/19 national budget describing it as a “statement premised on miscalculated targets”.
Finance Minister, Goodall Gondwe, two weeks ago presented a K1.5 trillion financial plan which is 13 percent higher than the revised K1.1triillion 2017/18 budget.
During a budget analysis session organised by Economics Association of Malawi (Ecama) in Lilongwe, the economists faulted the proposed financial plan for targeting short-term measures-which makes the budget consumption based.
Presenting the analysis, Ecama President, Chikumbutso Kalilombe, said the budget omitted long-term structures for economic growth.
Kalilombe described as a setback the absence of direct investment into the energy sector in the 2018/19 national budget.
He also expressed worry that the overall budgetary deficit, estimated at K242 billion or 4.5 percent of the Gross Domestic Product (GDP), has the potential of reversing the hard earned macroeconomic stability.
This, according to Kalilombe, would spar the government’s borrowing appetite and, in turn, affect inflation and interest rates developments in the country.
Ecama further noted that the allocations made towards maize purchases, malata subsidy and the Farm Input Subsidy Programme should have gone to critical areas such as energy to significantly impact the growth of the economy.
Malawi Confederation of Chambers of Commerce and Industry, Chief Executive Officer, Chancellor Kaferapanjira, said rampant corruption in government is one of the reasons Malawi is failing to move out of the power crisis and other challenges facing Malawi.
“Dealing with technocrats in government, they cannot let you have a license unless you accept them to be shareholders in your business or indeed if you pay them behind. This youth internship programme, you should know that no one goes to university to become an intern. Internship cannot be an alternative to giving the youth jobs,” Kaferapanjira said.
Another panelist, Hannock Kumwenda, tipped government to deal with arrears to the private sector, address issues of domestic borrowing and resolve power crisis the same way they do with food shortages.
During the workshop, it came out clear that there is misalignment of the budget to the Malawi Growth and Development Strategy- MGDS III.
Economists described the budget as exaggerated, saying the youth internship programme is a big joke, adding that chiefs do not deserve a raise, let alone a salary.
Reserve Bank of Malawi Director of Economic Policy and Research, Kisu Simwaka, who was one of the panelists during the discussion, said, every year, a budget that is formulated has an ambitious GDP growth.
“If you have a higher GDP growth, it means that you will also have a higher revenue projection and, therefore, higher expenditure. Now in the event that the GDP ends up being lower it means that you have created more than what you are going to spend.
“This is why you see MRA [Malawi Revenue Authority] failing to meet projections simply because the GDP assumption was wrong. Then you will see government over borrowing and then that creates problems in macroeconomic stability which has been achieved,” Simwaka said.
Kalilombe said the economists’ body would pen Gondwe on the concerns raised during the meeting.
In the budget, Gondwe conceded that intermittent power supply is one of the challenges negatively affecting private sector activities. Gondwe said the situation would only stabilise after 2021, mainly banking on the Malawi- Mozambique interconnector.
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