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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16 thoughts on “Goodall admits Malawi economy in ‘turbulence’: Budget reduced by K32.7bn”

  1. ineyo says:

    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.

  2. Kalinga Mchibo says:

    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 allocation to a ministry in South Africa. Shouldn’t we be talking of a Marshall Plan instead of wasting our time discussing 20 billion rands. Isn’t the realities of quota system with us where you have public sector managers who know practically nothing. This economy need impossible brains to get it into right direction not the quota system products.

  3. peter must fall says:

    Is hunger under control Mr Minister?

  4. BigMan says:

    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.

  5. Non Investing Investor says:

    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!

  6. No laughing Matter says:

    You keep voting them in, so who do you blame

  7. LessChildrenPlease says:

    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?

  8. ben says:

    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

  9. Precious says:

    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.

  10. Adolf says:

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

  11. citize says:

    Ndalama akuti tilibe.lero munthu WA mkulu akatsegulira kamseu ka ma kilometre ochepa kwambiri.Koma Ndalama zimene boma liwononge lero ndi zambiri ndi munati tilibe Ndalama.Ndalama zimene boma lilibe ndi za munthu wosauka period.

  12. matako says:

    As long as APM and his DPP syndicate continue to bury their heads in the sand nothing will change. The donors made clear and specific demands. Close the loop holes in govt payment system.attack corruption.Muthalika has vehemently refused to address both. Corruption is what greases the palms of DPP potical syndicate. Muthalika does not care about us. He is selfish greedy and corrupt to the core.As long as he has access to the loot corruption machinery will stay intact. Why do you think he has never denounced corruption? Why do you think he has not accepted responsibility for the ailing economy? The only hope we have is to remove this rotten corrup rat by any means necessary before it’s too late

  13. Kapeee says:

    Atumbuka apanga plan kuti alande boma goodell gondwe nditumbuka akuononga chuma dala aziti DPP yalephera.olo a MCP atumbuka akukupusisan azakutayani

  14. gabriel mwale says:

    Its not fair on the DPP government that the West are failing to give them aid not funny at all and yet they gave PPthe much needed aid.

  15. DPP Bluemovie League says:

    Rafiq Hajat is correct, minister wadada Gondwe is completely wrong to say that the hunger situation is under control.

  16. Mpandazina Kuopakumangidwa says:

    Fiscal under-performance and resultant anguish Malawians are subjected to is man-made, a creation of dpp govt. Govt needs to oblige to the demands of donors, which are also in the interest of Malawians, and unlock donor support to budget. Govt needs to stop being rude and pompous, Seal loopholes that led to cashgate and prosecute all culprits in all forms of cashgate, including the 177 bn bingu’s theft. We need donor support to our budget – salaries come from budget and we’re getting the lowest salaries in the whole SADC, breeding temptations for corrupt practices to make ends meet. If this dpp govt is not ready to meet donor conditions and unlock donor support then we have to strengthen our impeachment calls and civil unrest to unseat this govt -it’s wasting our time.

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