Economists speak on budget review
Economists have cautioned Ministry of Finance and Economic Affairs to tread carefully on revising the proposed K3.7 trillion 2023/24 National Budget in the wake of the devastation caused by Tropical Cyclone Freddy.
The economists expressed their views in separate interviews with Business News after Minister of Finance and Economic Affairs Sosten Gwengwe, in his budget winding up statement in Parliament on Tuesday, announced that the budget had been revised downwards from K3.872 trillion to K3.789 trillion.
Tropical Cyclone Freddy has destroyed infrastructure such as roads
The minister said the revision was in anticipation of changes in macroeconomic assumptions underpinning the budget following the impacts of the cyclone which has put under threat macroeconomic variables and their targets
But Malawi University of Business and Applied Science associate professor of economics Betchani Tchereni said it was ironic that at a time when the country has to reconstruct, government has trimmed the budget yet the expectation was an increase.
He said: “But I do understand that the reasoning of the minister is that we cannot be increasing at a time when we should actually be thinking about a cutting down on a deficit.
“We are at situation that when we increase expenditure, we have to borrow more.”
Tchereni said to reconstruct, government needs to trigger economic activity.
On his part, economist Edward Chilima said the fiscal year 2023/24 will be a tough period characterised by high inflation rate, slow gross domestic product (GDP) growth and high public expenses.
He said: “I see acceptance of reality on the ground. The cyclone requires huge sums of resources and this will certainly derail some planned progress.”
Speaking separately, economist Bond Mtembezeka said it is not so much about revising the budget downwards, but the resource re-allocation and optimisation.
“The cyclone has had a devastating effect indeed but i am confident that revenues will not drop very significantly and also considering that we are receiving assistance from bilateral and multilateral partners,” he said.
Last week, Reserve Bank of Malawi painted a gloomy picture on the economic prospects for the country due to the impact of Tropical Cyclone Freddy.
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