BLANTYRE-(MaraviPost)—The mid-year budget review report which was presented on Friday in parliament by Minister of Finance, Economic Planning and Development, Goodall Gondwe, has attracted mixed reactions from different quarters, with International Monetary Fund (IMF) lauding the government for performing well in the first half of the financial year
Presenting the 2016/2017 Mid-Year Budget Review in Parliament on Friday, which has been revised downwards to K1.129 trillion from K1.149 trillion, Gondwe hailed Peter Mutharika administration for putting the country’s economy on a firm path to recovery with the effective fiscal and monetary policies.
He cited the decline in inflation to 10.2 percent as of January, a three percentage points reduction in policy rate to 24 percent and a 5.7 percent over performance in the domestic revenue as some of the indicators portraying the economy on the rebound.
Commenting on the report, the IMF has said while the half-year fiscal performance is reassuring and has a clear focus, consolidation will need continued focus on bringing down inflation with fiscal discipline as an anchor.
In an interview with The Nation over the weekend, IMF country representative Jack Ree said the six months has seen a continuation of fiscal consolidation which is key to turning Malawi’s economic fortunes around unlike in the past five years.
“[the year] 2016 has been very difficult. The authorities needed to tackle an immense economic shock coming from the second consecutive year of drought.
“Confidence on Kwacha was low. Inflation expectations were locking at mid-20 percent range, which appeared unbreakable. However, government demonstrated an indestructible will to deal with the problem,” he said as quoted by The Nation newspaper in its 20th February edition.
Ree said policy focus remained persistently on discipline budget and keeping a lid on monetary excess, praising the authorities on structural reforms, particularly in public finance management.
“We are seeing results already,” he said.
However, Ree was coy to comment of the resumption of donor support.
“I would rather not speculate on the prospects of specific donor support programmes that is being discussed,” he said.
Malawi Economic Justice Network (Mejn) executive director Dalitso Kubalasa told the local paper that the government has a lot more to do.
“Government continues to struggle on bringing into fruition both the assumptions on the revenue side and the expenditure side of the budget. The 71 percent underperformance of the grants weighs heavily against the registered positive performance particularly in the tax revenues.
“The slowdown in expenditures also points to a worrisome development around government’s performance and obligation of providing quality public services to the masses, particularly the poor,” Kubalasa said as quoted by the local paper.
Commenting on the same, Malawi Confederation of Chambers of Commerce and Industry (MCCCI) chief executive officer Chancellor Kaferapanjira the performance of government hides a lot of expenditure burden that is passed on to the private sector and suffocating its performance.
Meanwhile, Malawi Congress Party (MCP) President Lazarus Chakwera, has bashed the Democratic Progressive Party (DPP) led government that the donors cannot trusted the leadership due to its usual casual way of handling corruption.