Malawi Finance Minister Goodall Gondwe unveiled Friday the 2015/16 financial plan which he said has no budgetary support but projected the economy to grow by 7 percent, saying inflation will decline to 16.4 percent and that interest rates will fall.
Until 2014/15 budget when donors withdrew aid, donors contributed up to 40% of Malawi annual budget.
Gondwe told parliament in the capital Lilongwe that falling inflation due to declining fuel prices and a narrowing budget deficit will boost Malawi’s currency, the Kwacha and see a rebound in the southern African country’s economy, despite a fall in donor grants
He told parliament that Malawi should stop judging its economic performance through the eyes of donors but he cited donors as a reason government won’t ditch Farm Input Subsidy Programme (FISP).
“It is critical that we should change our mindset and stop assessing our performance in the management of public finances in terms of how much donors support we have managed to receive. Instead, we should start congratulating ourselves based on how well we have performed with the meagre resources available to us,” said Gondwe.
The Finance Ministers said the priority of 2015/16 national pegged at K902 billion, up from K801 billion last year, will be to acquire enough food to ensure Malawians have enough food.
The Government will spend K8 billion for maize purchases during this year and K13 billion will be spent during the 2015/16 on maize which will benefit all Malawians.
He said the priority for food in 2015/16 national budget is particularly because of the floods that devastated parts of Malawi earlier this year.
Gondwe said the recurrent budget will be at K674.6 billion while the development budget will amount to K224.0 billion in 2015/16.
The 2015/16 budget also includes a net lending figure of K3 billion to capitalize the Higher Education Students Loan and Grant Fund.
In view of this, the payment of allowances to new students in public universities will be abolished.
Statutory expenditure is pegged at K424.3 billion, representing 47 percent of the total expenditure and net lending budget of K902 billion.
The overall deficit for the 2015/16 is projected at 4.0 percent of GDP which is slightly lower than that of 2014/15 which was at 4.2 percent of GDP.
At the same time, domestic borrowing is projected at K25.0 billion, or 0.7 percent of GDP, Domestic debt stock will, therefore, reduce further from 15.9 percent to 14.5 percent of GDP in 2015/16.
Gondwe also said tax revenues are projected to rise from MK581.0 bn to MK592.0bn in 2015/16.
Apparently, Malawi Revenue Authority (MRA) has strengthened the tax administration regime.
Finance minister announced that government will implement a number of priority programmes and these are;
- the Farm Inputs Subsidy Programme which will be allocated K41.5 billion,
- ii) Migration to the National Pension Scheme, whereby those public officers who are below 50 years old will migrate to the new Pension Scheme, and MK51.5 billion has been allocated;
- iii)A Youth Employment and Empowerment which is aimed at creating youth employment and capacity building for the youth in the country,
- iv) The Greenbelt Initiative and Job Creation,
- v) The Promotion of Legume Production where an allocation of K1 billion has been provided in the 2015/16 budget to promote legumes production,
- vi) The Flood Emergency Recovery Programme to address the effects of the flood disaster that occurred in some parts of the country.
“The Government has already secured K36 billion from the World Bank and part of this money will be used to purchase maize for the silos and rehabilitate roads and bridges, irrigation and other public infrastructure,” Gondwe said.
Other priority programme for government, Gondwe said, will be the Public Sector and Public Finance Management Reforms, the Establishment of the National Planning Commission, and the Development Financing that will result in the creation of a financial institution that will finance development projects in the country.
In addition, Gondwe said the Malawi Enterprise Development Fund (MEDF) will also be reviewed with a view of transforming it into an agricultural financial institution that will provide credit to poor and medium sized farmers in the country.Follow and Subscribe Nyasa TV :