The Economics Association of Malawi (Ecama) has said the success of budget implementation going forward would be largely dependent on whether the projections for growth in revenue given by Minister of Finance, Goodall Gondwe, are realistic.
In its observations, the association also said it is not immediately clear whether an assessment based on actual past expense figures has been done to ensure that expenditure cuts the minister announced would be adequate to balance the budget.
Responding to our questions, Ecama President, Chikumbutso Kalilombe, said the government should also clearly explain why the Agricultural Development and Marketing Corporation (Admarc) ended up with a debt amounting to K45 billion when the stock it held was of lower value.
Kalilombe questioned whether Admarc had bought the stock at inflated prices or if it is bank charges that led the corporation to incur such a huge debt.
“This is important to understand as the minister announced plans for more purchases of maize by Admarc and the National Food Reserve Agency.
“We need to be sure that we will not experience the same situation next year. Therefore, further detail on that is required to give us comfort,” he said.
The association has further said strict monitoring will be key to ensuring that expenditure is kept within required limits.
Presenting the Mid- Year Budget Statement to Parliament in Lilongwe last week, Gondwe indicated that the government has incurred some unplanned expenditure including a bailout made to Admarc of K45 billion and K5 billion over-expenditure by the Malawi Police Service and Malawi Defence Force.
Kalilombe said it is surprising that how the figure of K5 billion, which he described as substantial, came out as an unexpected expense on the wage bill.
“Otherwise, we are grateful that the minister acknowledged some of the concerns we have continuously raised. He has acknowledged need to reduce domestic debt stock and also acknowledged it is foolhardy to borrow for consumption.
“We just hope that government lives by that undertaking,” he said.
In an earlier interview, International Monetary Fund (IMF) Resident Representative, Jack Ree, said entrenching the gains in macroeconomic stability would require continued fiscal consolidation.
Ree said if the fiscal deficit in the first half turns out to be larger than what was programed for the financial year 2017/18 budget, then the mid-term review should address plans to correct the course.
This is coming at a time there is weak revenue performance wi th the Malawi Revenue Authority failing to meet its revenue collection target by K45.9 billion.
But Gondwe remains optimistic that revenue collection would normalise in the second half of the 2017/18 financial year and yield roughly 70 billion more than what was collected in the first half.
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