Minister of Finance Economic Planning and Development Joseph Mwanamvekha on Friday morning presented the 2020/21 problematic National Budget with a backdrop of experiencing a dramatic 35 percent drop in revenue collection.
The 2020/21 National Budget has been pegged at K2.2 trillion, which represents a 9 percent increase from the 1.84 trillion mid-year revised estimate in the 2019/20 budget. The K2.2 trillion nominal value of the new budget represents 28.3 percent of Malawi’s Gross Domestic Product (GDP).
In his presentation, Mwanamvekha disclosed that during the 2019/20 budget implementation, it was not possible to reduce public debt because the economy could not generate enough revenue.
He added that government has, since, written creditors to consider debt relief owing to the novel coronavirus.
“The 2019-2020 budget faced implementation challenges as monthly revenue collection reduced from K90. 8 billion to K59. 1 billion representing a drop by 35 percent,” he said.
He further revealed that the 2020/21 National Budget will incur a budget deficit of K632 billion, which represents 10 percent of Gross Domestic Product (GDP).
“The higher-than-expected budget deficit is on account of subdued domestic revenue, increased expenditure on security due to post-election demonstrations, fresh-election,” he explained.
The minister further feared that should Covid-19 extends to December 2020, the domestic economy is likely to go into a recession, with an estimated negative real GDP growth rate of -3.8 percent.
Mwanamvekha said the fiscal plan he presented to the House t is intended to build the country’s resilience and speed up economic recovery from the devastating impact of Covid-19 pandemic.
“Government will therefore continue with efforts to tackle the four key issues namely; economic growth, job creation, economic empowerment, and infrastructure development. These will however be pursued with full recognition of Government’s focus on mitigating the social and economic impact of the pandemic,” said Mwanamvekha.
He said the 2020/2021 budget has been developed under the theme “Economic Recovery, Mitigation and Building Resilience”Follow and Subscribe Nyasa TV :