Ahead of the opening of the Parliament for deliberations on 2021 to 2022 national budget by President Lazarus Chakwera, economic experts in the country have warned government to lean toward an investment based budget to align with the Malawi’s vision 2063.
The economic think tanks have indicated that the government’s appetite for borrowing is insatiable and so further borrowing will lead to an increase in interest rates and high inflation rate.
During mid year budget review, Minister of Finance, Felix Mlusu, disclosed that Malawi’s budget deficit is at K810. 07 billion of which K564. 04 billion was borrowed locally while K246.03 billion was sourced through foreign borrowing.
Mlusu further said K6.01 billion was projected to be collected during the first half of the current budget year but what the government managed to collect was below expectation by 6 percent.
Meanwhile, the minister has disclosed that government has put austerity measures to ensure that there is an increase in revenue collection. He stressed that government will look into all possible measures to recover the deficit hampering the fiscal plans.
Commenting on the development, Malawi University of Business and Applied Sciences – (MUBAS) Dr Betchani Tcheleni, said government has to put in place robust austerity measures in order to make the budget development targeted and not consumption based.
While concurring with Dr Tcheleni, Economists Association of Malawi – ECAMA President, Lauren Nyasulu, said excessive borrowing is too retarding for the country’s economy. Nyasulu further said government needs to explore other better means of sourcing funds for the budget.
Malawi pegged its 2020/2021 national budget at K1.7 trillion but it was not fully covered due to low revenue collection.