Malawi 2022/23 budget likely to exceed K2 trillion
The nominal value of the 2022/23 National Budget, which the newly-appointed youthful minister, Sosten Ngwengwe, is scheduled to present in a few weeks to come, is likely to exceed the K2 trillion mark, Nyasa Times estimates.
These calculations are based on the hint, which President Lazarus Chakwera has provided in his State of The Nation Address (Sona) delivered in Parliament today, marking the opening of the 2022/23 National Budget meeting in the chamber.
In his 80 minutes long address, President Chakwera, touching on economic outlook, stated that expenditure in the imminent 2022/23 fiscal plan is expected to grow to 23.3 percent of Gross Domestic Product (GDP), representing an increase from an estimated 19.7 percent of GDP in 2021/22.
Chakwera said: “Madam Speaker, in 2022 GDP is estimated to grow by 4.1 percent up from 3.0 percent in 2021, on account of economic recovery measures being
implemented by Government as contained in the Socio-Economic Recovery Plan (SERP).
“This plan acknowledges that the economy remains depressed largely due to the Covid-19 pandemic and outlines interventions to reinvigorate it.”
The president, however, said such an increase will be necessitated on account of short-term pressure on Covid-19 related expenditure.
In the same vein, Chakwera also hinted that government revenues are projected to increase to 15.4 percent of GDP in the 2022/23 financial Year from an estimated 12.4 percent of GDP in 2021/22 on account of current effects of domestic resource mobilisation efforts.
Malawi’s rebased nominal GDP is currently seen at $10.9 billion (about K8.2 trillion) and this means that the 2022/23 financial plan will most likely settle at around $2.5 billion (or an equivalent of K2.1 trillion which represents 23.3 percent of $10.9 billion.
Nyasa Times conservative estimation has been guided by today’s mid-rate exchange rate of K816.40, based on Reserve Bank of Malawi (RBM) daily market statistics.
Malawi Kwacha’s buying rate is at the moment marked at K808.3178 while selling rate is pegged at K824.4826.
The estimated K2.1 trillion is slightly above the K1.9 trillion 2021/22 budget, which expires on March 31, 2022 following the change in budget cycle as announced by Tonse Alliance Government in December 2020.
Implementation of the 2022/23 budget starts on April 1, 2022.
Meanwhile, Chakwera has announced a litany of measures to be implemented across government in the course of executing the 2022/23 National Budget to ensure that public resources are utilised effectively.
Announcing the measures, Chakwera said: “Fiscal rules, medium term budgets and plans, and annual budgets are meaningless if expenditure cannot be controlled.”
Firstly, Chakwera has ordered a review of the benefits and entitlements of senior government officials, including the Presidency and all Cabinet Ministers.
Secondly, Chakwera has demanded a reduction in procurement of motor vehicles in terms of numbers, type and sizes.
Chakwera has also ordered a requirement for Ministries, Departments and Agencies (MDAs) to seek Treasury approval before effecting new recruitments.
He has also demanded a requirement for all government institutions, without exception, to install and use pre-paid meters for utilities.
The president also wants the fast-tracking of the digitalization drive to reduce paperwork and fraud, which has already been added to the portfolio of the Minister of Information, as well as procuring security equipment and fertilizer directly from manufacturers instead of ‘middlemen’ to cut landing costs.
President Chakwera also seeks the fixing of the perennial delays caused by people managing IFMIS by recruiting competent graduates in Accounting, and the operationalisation of the Debt Retirement Fund to deal with the rising public debt.
Malawi recorded a Government Budget deficit equal to 5.70 percent of the country’s Gross Domestic Product in 2020.
Government Budget is an itemized accounting of the payments received by government (taxes and other fees) and the payments made by government (purchases and transfer payments).
A budget deficit occurs when a government spends more money than it takes in – The opposite of a budget deficit is a budget surplus.
The economy of Malawi is predominantly agricultural, with about 80% of the population living in rural areas.
Malawi, the landlocked country in southeast central Africa ranks among the world’s least developed countries.
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