2021/2022 national budget: Opposition leaders differ, consumers optimistic

The 2021/2022 national budget as presented by the Minister of Finance Felix Mlusu on Friday, May 28, 2021, has attracted mixed reactions from pundits and politicians, with many though expressing optimism it is pro-poor and that it may positively change the nation’s economic fortunes in the short-term.

According to some analysts, the budget has delivered some Tonse Alliance campaign promises, with some calling it ‘a start of turning things around’.

Kapito: Budget implementation is key

John Kapito of Consumers Association of Malawi (CAMA) the budget favours the consumer in every aspect and that should it be well implemented, people’s lives may improve tremendously.

“The budget is visionary in that it has incorporated the National Agenda 2063. We have noted various tax reliefs that consumers have will obviously benefit from this budget. The budget has answered on many long awaited for promises, including the free water and connection matter, which is highly commendable,” he said.

Kapito cautioned Malawi Revenue Authority (MRA) officials on corruption, claiming government loses a lot money due to corrupt practices, which affects service delivery negatively.

The national budget, which is pegged at K1.990 trillion has come to offer free duty free week, scrapped off K17,500 electricity connection fee with an aim of easing life from the heavy economic havoc caused by the lethal Covid 19 Pandemic.

The finance minister said that, the new month PAYE schedule will be K0 to K100, 000 at zero percent; between K100, 000 to K1.0 million at 25 percent; between K3.0 million to K6.0 million at 35 percent; and from K6.0 million and above at 40 percent.

“It will promote distribution of wealth in the country and increase disposable income for all low income earners,” said the soft-spoken Mlusu, when he presented the budget shaped under the theme ‘An inclusively wealthy and self-reliant industrialized upper-income nation’.

Mlusu expressed optimism that in the subsequent nine months, the nation would have achieved a Gross Domestic Product (GDP) growth rate of 3.8 percent, an average inflation of 7.4 percent, a constant exchange rate of about K780 to the dollar, a policy rate of about 12.0 percent and tax refunds of 3.0 percent of total tax revenue collection.

This is the second Tonse Alliance’s national budget, and it has been built on three main ambitions namely; meeting the much waited creation of jobs, achieving a permanent food security, and creating wealth for all Malawians as attached in the recently launched Malawi 2063, a long-term national plan whose main objective is to turn Malawi from a poor country to a middle-class economy by 2063.

Some of the major budget highlights include, increased VAT registration threshold from K10 million to K25 million within the SADC region, no duty for importation of goods by third parties, no duty for importation for sport buses and no importation duty for spare parts for personal use, stationery office furniture, protective wear and tools.

The national budget also has some ambitious sectoral allocations aimed at improving the lives of Malawians like on governance and rule of law at K37.9 billion, energy at K60.7 billion, transport and public works at K208.4 billion, and a lion’s share has been allocated to education and skills development at K327.3 billion, while the health sector has been given K187.2 billion. The agriculture sector has been allocated an amount of K284.4 billion, promising a further delivery of Affordable Input Programme (AIP) to ensure household and national food sufficiency.

Mlusu also announced that materials for church and mosque construction shall be duty-free, duty free importation of vessels, duty free importation of vehicles for court justices and MDF officers from grade A to B.

Malawi Electoral Commission (MEC) commissioners will also import personal vehicles duty-free.

VAT has been removed on raw materials and on printing and publishing raw materials and on manufacturing and medicaments raw materials while 10 percent VAT has been removed from soap and noodles.

Excise duty on opaque beer has been reduced from 30 percent to 10 per cent, while on malt beer, it has been reduced from 60 percent to 40 percent. Fuel ethanol and printed books, text books have been declared duty free.

While opposition United Democratic Front (UDF) parliamentarian, Lilian Patel described the national budget as good, Democratic Progressive Party (DPP) spokesperson on finance, Joseph Mwanamveka was pessimistic.

Mwanamveka told journalists that the budget estimates are unrealistic considering that Kwacha continues to depreciate and that the economic outlook is generally grim.

Mwanamveka is expected to give an official response to the budget in two weeks’ time at the conclusion of parliamentary national budget cluster meetings.

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