The 2015/2016 national budget which is pegged at MK902 billion minister of finance and economic planning, Goodall Gondwe presented on Friday, May 22, in the national assembly has been described as a punitive and hopeless due to heavy taxes put on across on essential services.
Delivering the national financial plan in the capital Lilongwe, the Finance minister projected the country’s economy to grow by 7% while inflation will decline to 16.4% with also falling of interest rates in banks.
Gondwe told the Parliament that falling of inflation due to fuel prices reduction and narrowing the budget deficit will boost Malawi’s currency, the Kwacha in rebounding despite holding of aid support from major donors on the budget.
The Finance minister emphasized the need for this nation to start believing in itself that economic growth was attainable without the eyes of the donors as this year’s national cake will acquire enough food to ensure that Malawians have enough food hence Farm Input Subsidy Programme (FISP) whose this year’s allocation is at MK41.5 billion, wont be abandoned.
He said the priority for food in the budget is particularly based on floods which devastated some parts of the country early this year with MK8 billion set aside to purchase maize and MK13 billion will be spent to feed Malawians.
Gondwe said the recurrent budget will be at MK674.6 billion while the development budget is amounting at MK224.0 billion in 2015/2016 with the overall deficit at 4.0 percent of GDP which has slightly lowered than that of 2014/2015 which was at 4.2 percent of GDP.
While domestic borrowing is projected at MK25 billion of 0.7 percent of GDP that domestic debt stock will reduce further from 15.9 percent to 14.5 percent in 2015/2016 as tax revenues are projected to rise from MK581 billion to MK592 billion.
He said this year’s national cake’s priorities including establishment of National Planning Commission, Development Financing and reviewing Malawi Enterprise Development Fund (Madef) in view of transforming agricultural sector as it will provide credit to poor and medium sized farmers in the country.
As the financial plan will operate with local resources, the budget has introduced 10 percent excise duty tax to be levied on phone text messaging and all data transfers including internet and similar services.
Gondwe said the tax on internet has been put following the tremendous uptake of the telecommunication services in Malawi and in order to expand the tax base to generate resources for the national budget which commentators has described the move as to punish the poor who rely much on such lower services.
Reacting to the 2015/2016 National Budget presentation made in Parliament by Finance Minister, Henry Kachanje, Economic Association of Malawi (ECAMA)’s President said the financial plan fall short of transformative agenda that most Malawians hoped to hear from Gondwe.
Echoing on the same, the Malawi Congress Party (MCP)’s spokesperson for finance in Parliament. Joseph Njobvuyalema said 7 percent forecast on the budget was ridicules and too ambitious aimed at hurting the poor.
“Poor Malawians will continue be hurt with heavy taxes introduced on phone data and texting messages that will only benefit the ruling class as they will be paying less on such services “, said Njobvuyalema.
Adding his voice to the budget, Ralph Jooma, People’s Party (PP) Chief Whip in Parliament, a former Finance Minister in President Joyce Banda regime said the national financial plan was not achievable and can’t be believed.
But the ruling Democratic Progressive Party (DPP)’s Chief Whip in Parliament said the criticisms were premature, mischievous which lacked substance and objectivity.