Ernest Mtingwi views on financing Malawi budget 2015/16

Parliament as well as the nation  is now considering and digesting the 2015/2016 national budget amounting to K901 billion  which was presented to Parliament on Friday 22nd May 2015 by the Minister of Finance Goodall Gondwe.

Finance Minister Goodall Gondwe holds his Budget box

Finance Minister Goodall Gondwe holds his Budget box

Already various comments and observations have started pouring in from various stakeholders which will no doubt assist members of parliament when they start debating the budget. I therefore
join the various stakeholders to comment on the budget.

What always catches my attention is the financing of the budget. I always consider the financing of the budget extremely important because spending follows income. Without income there can be no
expenditure. Even saving depends on earning income. This applies both to people and organisations including governments.

In presenting the 2015/2016 budget the Minister of Finance said and I quote: “Tax revenues are projected to rise from K581 billion to K592 in 2015/16.” This is an increase of K11billion. In percentage terms this is an increase of 1.9% . If indeed the tax revenue figures of K581 billion for 2014/2015 and K592billion for 2015/2016 are correct then it means that tax revenues will grow by less than 2% in 2015/2016 fiscal year when the economy is projected to grow by 7%.

If this turns out to be the case then this is likely to be the lowest growth in tax revenue since 1964 when Malawi became an independent nation.

Even in the 1992/1993 fiscal year long before the Malawi Revenue Authority(MRA) was formed tax revenues grew by 13%. This is why I have decided to raise this point because if this turns to be the
case it is imperative that the Minister of Finance explains why he is of the view that tax revenues will grow by less than 2% in 2015/2016 fiscal year.

Since MRA became operational in February 2000 it was only in 2001/2002 fiscal year when tax revenue grew by 3.7% only.

Thereafter tax revenue has been growing at more than 15%. An explanation by the Minister of Finance is important because as the Minister of Finance himself has said the 2015/16 budget will be
financed from domestic revenues of which tax revenues form a large share.

Furthermore I do not think this very low projected tax revenue growth can be justified by the need to be conservative in estimating tax revenue when there is a solid long record of tax revenue
collection.

The formation of the Malawi Revenue Authority(MRA) was one of the reforms government  implemented to boost tax revenues. The expectation therefore is that the annual growth of tax revenues  in the post MRA era should be more than in the period before MRA.

  • Ernest Mtingwi is former director general of MRA
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16 thoughts on “Ernest Mtingwi views on financing Malawi budget 2015/16”

  1. Mbanangwa says:

    Moving in reverse gear!

  2. fertiliser subsidy says:

    No allocation of money for fertilizer subsidy this year
    K40bn tigwiritse ntchito zina chifukwa programme imeneyi palibe tikupindurapo.
    Munthu sumamudyetsa phala moyo wake onse

    it has to reach a stage one has to be independent.

    you are not going to be decampaigned if you remove that in the budget because everybody knows what we are facing in Malawi.

  3. Anjila says:

    demateo the agent of lhomwe leave Ralph Kamoto alone. Ralph is working under extremely difficult situations where his number 2 lady and a certain ex policeman are working against him reporting him to authorities and corruption with Indians. How can he perform when the two both want him to be fired and to replace him. Only God can protect Ralph.

  4. Mnunkhaludzu says:

    The writer is a former tax man and his interest is to see taxes grow year by year not understanding the other side on its implications on those taxed. Malawians are over-taxed and what needed to spread the tax burden to all non-taxed brackets. More important, is to reduce the financial leakages to corruption, fraud, theft and mismanagement or faulty decisions to reverse this pressure of revenue needs……Taxes on imports, whether secondhand or new, needed to the revised downwards as this is closing the ceiling of opportunities to expand the spectrum of middle income earners at the expense of the already rich individuals!

  5. Mma well says:

    Mind you mr minister businesses are closing down how are you going to stimulate the economy with this if what Mtingwi is saying is anything to go by

  6. Mphwache says:

    Every company Financial Controller knows that the first thing to do in dire economic times is to cut costs. I would love to see a real cut in the vote that finances the President and the Vice President. I have been counting the number of vehicles on the presidential convoy which is always more than 18 vehicles. I know pretty well other Presidents/ Prime Ministers of richer nations who have a convoy of 6 or 7.

    The opulence that is the presidency in this country is not sustainable, and these are things we need to reduce and cut costs on. The same applies to Ministers, and their deputies. Maybe we can now start discussing the national budget.

  7. demateo says:

    If I were APM I could have ask from others MRA needs capable people like Bizwick who can interact with investors. Just imagine. Since kamoto took over he has never reach tagert what is that busy. Dismissing people. MRA is a main budget. Contributed so of you don’t reach tagert where will the money coming from imagine. Ask them how many containers are coming how many people. Are buying goods out side the country because of bad governors be friendly to the business community then things will. Change

  8. What do you, Mr. Mtingwi saya about corruption cases that sorrounds your workplace, MRA?

  9. Concerned Citizen says:

    I am seriously troubled with the concept of FISIP. If we are to put politics aside, overall what we are saying is that we are pinning all our hopes as a nation on the least productive sector of the economy by entrusting them with K40bn. What logic is this? Why not give K20m to the most productive commercial farmers or prison farms to grow maze for the nation in the lower states. The results would be much better. Is anyone thinking outside the box in the corridors of power in our country?

  10. Nebo Jaba says:

    The Pace At Which Our Budget Is Moving Only Shows That We Are Indeed Very Poor And Its About We Bow Down And Start Begging Our Good Friends From Europe, America And Asia To Help Us With Funds To Supplement Our Sorry Domestic Revenues In Order To Survive In This Modern~Day~Expensive Life. Mr Gondwe Should Come Out Open And Tell Us The Truth As From Where He Will The Govt Shall Source Out The Other Funds Apart From The Tax Collections.,, Againg, I Am Also Looking Forward To Be Enlighted On The Issue Of Increment Percentage For Us The Civil Servants,,,, He Should Simply Explain Better Because No One Is Telling The Truth Out Here, Eish

  11. Nebo Jaba says:

    The Pace At Which Our Budget Is Moving Only Shows That We Are Indeed Very Poor And Its About We Bow Down And Start Begging Our Good Friends From Europe, America And Asia To Help Us With Funds To Supplement Our Sorry Domestic Revenues In Order To Survive In This Modern~Day Expensive Life. Mr Gondwe Should Come Out Open And Tell Us The Truth As From Where He Will The Govt Shall Source Out The Other Funds Apart From The Tax Collections.,, Againg, I Am Also Looking From To Be Enlighted On The Issue Of Increment Percentage For Us The Civil Servants,,,, He Should Simply Explain Better Because No One Is Telling The Truth Out Here, Eish

  12. wrong learders @MRA(ZIBALE) says:

    We are in serious financial trouble as a country because for the past 7 months or so The Malawi Revenue Authority has failed to collect enough revenue, in other words they have been under-collecting where will we get the money to finance the budget domestically because by the look of things the trend at MRA will continue unless maybe the APM changes leader ship of the Authority otherwise let us brace for tougher times ahead

  13. Achimidzimidzi says:

    Thanks a lot Mr. Mtingwi. It is a good observation that requires clarification.

    I, for one, need to know why they projected tax collection in that manner.

  14. Kadushu says:

    I think our minister of finance is not serious where is he going to get that balance to finance this huge budget

    1. Student says:

      Read comment 1, that is objective commenting. if there is anyone that is not serious it is Malawians,Kuba,Ulesi,patsepates, its ridiculous.

  15. Kadakwiza says:

    A country need investors to develop not donors. But as far as Malawi economy is concerned, we need donor support serious speaking. How can Malawians survive with K901 billion budget. This shows how poor we are. For a country to develop K901 billion is too small. President professor Peter Muthalika and his DPP government must swallow their pride and go to European and American countries door steps, and tell them that Malawi is poor and need budget support. We need jobs, we need service delivery. We want to see something different in our country.

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