Goodall admits Malawi economy in ‘turbulence’: Budget reduced by K32.7bn

Nobody should underestimate the economic crisis facing Malawi; Finance Minister Goodall Gondwe has admitted in parliament that the country is still passing through “turbulent times.”

Minister of Finance Goodall Gondwe: Malawi economy facing turbulent times

Minister of Finance Goodall Gondwe: Malawi economy facing turbulent times

Gondwe said when he tabled his mid-term budget review statement, announcing a reduction of a financial plan by K23.7 billion from an approved figure of K929.7 billion to K906.0 billion

“Our economy is still passing through turbulent times. I regret that we have not yet established a stable macroeconomic environment,” Gondwe told the House, adding: “A stable macroeconomic environment also provides conditions for attainment of high quality economic growth rates.”

Activist Rafique Hajat reacted in Twitter that: “An unstable economic environment breeds despair, uncertainty, shrinkage and anger against the government.”

In his statement Gondwe noted the rising prices of goods from 11% in 2012 to 23% and that inflation has “stubbornly remained high” at 24.9% to be the highest in SADC.

Gondwe said government is determined that the macroeconomic stability be achieved, in particular, that interest rates should be low enough.

The Finance Minister also dispelled assertions that the Malawi financial plan is ‘Zero-aid’ budget.

“This is not a Zero-Aid budget. At no point did we say so. We’ve appropriated grants from donors,” he explained.

He said bilateral donors only formally withdrew from budgetary support but in parallel, donors are increasing their “off budget” support massively.

The Minister noted disbursement of other types of grants is also diminishing.

Turning to the budget review, Gondwe said budgetary performance, total revenue and grants that were targeted at K386.1 billion at the end of the first half of the 2015/16 financial year were under-collected by K50.8 billion.

Domestic revenues that were targeted at K312.4 billion fell short of this amount by K12.7 billion down to K299.7 billion.

He said although a number of taxes performed well, the VAT underperformed by an amount of K5.6 billion.

In parallel, grants performed even worse where the target of K75.3 billion was under performed by K36.5 billion, less than half the targeted amount.

He said the recurrent expenditure that was targeted at K358 billion has underperformed by K20.9 billion down to K337.2 billion.

According to Gondwe the reduction is by the fact that half of the targeted expenditure on Farm Income Subsidy Programme  (FISP) of K35.7 billion was not paid for, a sizeable amount of just under K3.0 billion was in fact saved due to fiscal measures that were taken to ensure the needed fiscal prudence.

“In all, the performance of the budget this year has been better than before except for the projected expenditure on FISP. As the house is aware the bulk of expenditure on FISP relates to the imports of fertilizers and in view of the deep depreciation of the currency, the cost of procuring fertilizers has escalated.

“ However, this year, instead of shouldering all the escalated costs, the suppliers of fertilizers have had to shoulder some of the costs and the Government as shown in table 2 has accepted only K14.9 billion of the total escalated costs of approximately K30 billion”, Gondwe said

Farm Input programme will be redesigned next year, according to Gondwe.

But observers said the program should be abandoned altogether as it breeds corruption, benefitting politicians and corrupt Asian business persons.

Gondwe said then said there is need to strengthen effort at raising domestic revenues and to down play all donor grants in general and only expect to focus more on development loans from donors as a reliable mode of donor aid delivery.

As regards this year’s food shortage, Gondwe said the matter is “under control.”

Hajat observed through a tweet that: “The evidence on the ground suggests otherwise.”

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ineyo
Guest
ineyo
6 months 29 days ago

Someone only remembers the billions PP and company stole from govt account #1. Unfortunately he can’t even make a mention of the whopping 577 billion kwacha DPP and it’s opportunists robbed of the govt.

Let us learn to be objective in our analysis and arguments otherwise we are the same people breeding corrupt and arrogant politicinas.

Kalinga Mchibo
Guest
Kalinga Mchibo
6 months 29 days ago
A few days ago I listened to the Minister of Finance of RSA presenting a budget in which he allocated a whooping 707 billion rands to basic education for the next 3 years. This translates to MK31 trillion and wondered what type of economy Malawi has. MK906 billion translates to 20 billion rands at current exchange rate and we want to waste our energies on this budget that is aggressively anti development. As a country we need to reflect seriously on our economic activities. It’s unacceptable that as country we have a budget that is even nothing compared to an… Read more »
peter must fall
Guest
peter must fall
6 months 29 days ago

Is hunger under control Mr Minister?

BigMan
Guest
BigMan
6 months 29 days ago

Nothing new here. The world economy is in turmoil, climate change has hit the whole of southern Africa, donors have withdrew 40% budget support under PP which stole billions through cashgate. The result of all this is the poor situation that we find ourselves in. Lets support government work to solve the challenges, not pretend that if Joyce Banda or Jesse Kabwila were in power then everything would be sweet……. unless we are dull of course which unfortunately most citizens are.

Non Investing Investor
Guest
Non Investing Investor
6 months 29 days ago

Good Old Gone Where? Another failed prophecy,another failed government,another typically failed state, another useless leader ,another hunger season ,another droughtfull year ,another losing battle ,another refugee crissis headimg our way ,another cardiac arrest ,another jb to take over ,another mcp regime ,another tortured souls ,another lost child another torn home ,but it is the same old Malawi. Shame!

No laughing Matter
Guest
No laughing Matter
6 months 29 days ago

You keep voting them in, so who do you blame

LessChildrenPlease
Guest
LessChildrenPlease
6 months 29 days ago

Live within your means! A country cannot live on handouts forever. Cut expenditure to match your revenue streams. Families do it, why can’t govt?

ben
Guest
ben
6 months 29 days ago

Food crisis is due to insufficient rains out of our control, but kwacha depreciation has been exagerrated when we need to import maize,. We cannot afford to depreciate our currency by almost 100%. It will be impossible for kwacha to come back to 600 as exporters like Limbe leaf, JTI, Africa leaf, are keeping 100% of there export dollars. WHy is this when through colonial times exporters have only be allowed to keep only 60% of there dollars. why is Chuka allowing this.why cant he go back to old policy

Precious
Guest
6 months 29 days ago

Someone is blaming atumbuka here to divert attention of their failures .
Woe to you who thrive on nepotism. You cover your inadequacy by finding scapegoats. Of course your obvious scapegoat is atumbuka.
I wonder how the ministers of health and agriculture could be underperforming and yet you are still blaming atumbuka??? This can only happen in Malawi where tribalism has blinded even the so called learned.

Adolf
Guest
Adolf
6 months 29 days ago

The Atumbukas have nothing to do with economy.
A Malawi zangotivuta.Let’s us work hard.

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