BLANTYRE-(MaraviPost)–Malawi Congress Party (MCP) president Lazarus Chakwera, who is also Leader of Opposition in Parliament, has argued against Minister of Finance, Economic Planning and Development Goodall Gondwe on the economic rebound, saying Democratic Progressive Party (DPP) cannot be trusted by donors.
Chakwera was reacting to revised budget announced by Minister of Finance, Economic Planning and Development Goodall Gondwe when he trimmed the 2016/17 financial plan by K20 billion following poor performance of grants and development support from donors in the first-half of the year.
“As will be seen from Annex I, total revenue and grants at midyear of 2016/17 amounted to K430.2 billion against a target of K482.0 billion, reflecting an underperformance of 10.7 percent of the midyear target. This underperformance was dominated by a large underperformance of the expected grants from donors,” said Gondwe.
But Chakwera, in his response said the news of the underperformance of the grants should not come as a surprise, arguing with the rampant corruption taking place in the government no donor can gather confidence to pump in funds.
“It is not a surprise that the money did not come through because this government is still not trustworthy because when you look at corruption and fraud that is taking place in the country, no donor can have the audacity to invest in the country. And my assessment is that we are not out of the woods yet,” Chakwera said.
Gondwe lamented the “disappointingly low” grants and funds for foreign financed projects, where only K30 billion was received by December 31 2016 against a target of K103.3 billion reflecting an underperformance of 71 percent.
Despite the numerous challenges facing the country including the donor pullout, the Finance Minister said the economy rebound is possible with DPP led administration as they are putting in place measures which have already started yielding results.
“There is evidence that, six months into the implementation of the Budget, the performance of the economy commenced a rebound towards recovery that is reflective of the effectiveness of the fiscal and monetary policies being pursued by the Government.
“In particular, during this period, there has been a marked decline in inflation which resulted in a 3 percentage point reduction in the Reserve Bank Policy Rate, while the exchange rate has remained relatively stable. The rate of inflation plummeted to 18.2 percent in January – the lowest since May, 2012. Food inflation went down by 3 percentage points to 21 percent and non food inflation eased to 15 percent from 15.4 percent. This is a significant macroeconomic improvement,” said Gondwe.
However, Chakwera told Gondwe to stop talking about economic recovery considering that in every parliament session the minister sings the same song which never comes true.
“This is not the first time the Minister of Finance has talked about economic rebound, how could you talk about a rebound when you have a private sector that in six months has been the worst affected because government is failing to give them back the money it owes them?” queried Chakwera.
Chakwera stressed that there is no sign that the country’s economy is on the rebound, saying Gondwe did not outline specific issues that would lead to economic recovery.
Gondwe expects Malawi Revenue Authority (MRA) to collect an additional K57.2 billion in domestic revenue, an upward revision based on the tax revenue collections between July and December, 2016.