Looking ahead to budget meeting

Post was last updated: January 31, 2018

The Economics Association of Malawi (Ecama) says the key thematic areas to take centre stage during the Mid-year Budget Review Meeting should be how government plans to cut unnecessary expenditure and what mitigating factors it has put in place to mitigate the dry weather conditions.

A press statement signed by Speaker of the National Assembly, Richard Msowoya, indicates that the budget review meeting for the 2017/2018 Financial Year is scheduled to take place in the Parliament Chamber from February 5 to March 2.

This will be the second meeting in the current 47th Session of Parliament.

Speaking ahead of the gathering, Ecama President, Chikumbutso Kalilombe, said stakeholders will be interested to know how government will allocate resources to consolidate gains, at a time when the Malawi Revenue Authority (MRA) has missed its mid-year revenue target.

Action Aid has indicated that this may widen the fiscal deficit.

These revelations are coming at a time when figures from the Reserve Bank of Malawi (RBM) are showing that domestic debt stock increased to K912.9 billion in the third quarter of 2017, representing an increase of 7.3 percent from K846.1 billion recorded in the previous quarter.

“The implications of increased borrowing will be seen on how the indicators will hold.

“If we want to remain fiscally strong and maintain expenditure for essential services, then we will be interested to know, which areas government will cut expenditure to consolidate gains made so far,” he said.

Kalilombe further said government also needs to indicate what mitigating factors it has put in place to deal with the dry weather conditions as this may threaten yield and in the process impact inflation.

Food dominates the inflation basket with a weightage of over 50 percent.

“We need to know if the maize in reserves is adequate or what other measures we are looking at to maintatin momentum made on food inflation,” he said.

The Malawi economy achieved several milestones in 2016, including putting a lid on inflation, softer interest rates and a fairly stable Malawi Kwacha.

Pressure is now high on authorities to maintain the momentum in 2018.

However, there have been concerns that the gains may be eroded this year following the dry spell that has hit some parts of the country.

Spokesperson in the Ministry of Finance, Economic Planning and Development, Davis Sado, said the budget might be adjusted to take into account matters that have arisen since the last budget was presented.

Sado could not be drawn to comment further but said it [budget] will target key sectors that will require resources but without losing track of the fiscal framework.

Some captains of industry want Parliament to prioritise the looming hunger in view of Fall Armyworms and dry spells that have already ravaged the expected bumper harvests.

Economic think tanks are projecting the Malawi economy to grow between five and 5.5 percent in 2018 riding on the back of continued availability of food and prudent fiscal expenditure, among other factors.

The International Monetary Fund (IMF) has put growth in Gross Domestic Product at five percent this year but has said the figure may change after periodic statutory consultations with member countries, a process that is expected to start this week.

Investment and portfolio management company, Alliance Capital has given a cautious estimate of five percent, indicating that risks to growth still remain and these include weak tobacco prices, unfavourable climatic conditions and uncertainty over external donor inflows.

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