Malawi to stick with ‘painful medication’ to recover, says Finance Minister in 2013/14 budget statement

Malawi’s Minister of Finance, Ken Lipenga, on Friday presented the 2013/14 budget statement to Parliament on in the capital Lilongwe, saying  the the financial plan will continue with measures that will heal and recover the country’s economy.

He told Parliament that  the government of President Joyce Banda will continue to take “painful medication” as signs were that the “patient is getting better.”

“The road to recovery is not easy, but with painful medication, the tough and painful measures have begun to bear fruits,” Lipenga said.

Lipenga: There is evidence that the economy is healing

Lipenga: There is evidence that the economy is healing

“Signs are that the patient is getting better and is on the road to recovery,” Lipenga said.

“Although, the country’s inflation peaked at a high of 37.9 percent in February 2013, the good news, Mr. Speaker, Sir, is that inflation has started declining. Already by April 2013, headline inflation had started responding to our measures and eased to 35.8 percent, due to a tight fiscal and monetary stance implemented by the Government and new food harvests which had began to reach the markets,” said the Finance Minister.

He added that government has put emphasis on macroeconomic stability and preserving the conditions that are conducive to attracting investment, expanding and upgrading physical infrastructure, expanding access and improving the quality of social services.

The Banda administration last year launched an economic recovery programme, forced by the International Monetary Fund (IMF), to devalue the currency as a key condition to unlock a loan to cushion foreign exchange shortages.

Lipenga maintained that the country will continue to implement the “reforms and stay on course” for the farm-based economy to remain on track.

He said the “key objective” of the Banda government would be to “restore macro-economic balance and adhere to principles of market-led economy.”

“We will strive to live within our means to avoid building  of domestic debt,” said the Finance Minister who titled the his financial plan a “Transitional and Recovery Based Budget.”

“Mr. Speaker, Sir, we have, however, prioritized some critical expenditures in areas of Agriculture and Food Security,Health, Education, Transport and Water. Adequate resources, within the limitations of the resource envelope, have been provided to those sectors,” he said.

The Finance Minister added: “ With diligent management of the economy and efficient use of the resources provided, the country should expect quality service delivery.”

Lipenga told Parliament that the development partners are financing the budget to the tune of 41 percent of total expenditure.

“While this is good news in that it shows the trust and confidence that development partners have in Her Excellency Dr. Joyce Banda’s leadership and policies, it also raises the issue of long term fiscal sustainability,” he said.

“Development budget which is K154 billion is 70 percent financed by development partners and is only about 24 percent of the total expenditure.”

Lipenga also saluted all the taxpayers of Malawi and “urge them to continue paying their taxes with a smile.”

After tabling his budget statement, Lipenga concluded: “Mr. Speaker, Sir, I beg to move.”

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