Malawi budget review confirms economy is wilting —Goodall

Despite  steady economic forecasts the mid year budget review confirms  that the Malawi country’s economy is stressed with the looming shortage of food and  Finance Minister Goodall Gondwe has  indicated that he will propose some budget cuts when he presents the 2017/18 Mid-Year Budget Statement next week Friday.

Finance Minister Goodall Gondwe: Government did not foresee the dry spell and fall armyworms and the devastating effects it would have on the implementation of the budget

Minister of Agriculture, Irrigation and Water Development Joseph Mwanamvekha told Parliament on Monday that 1.9 million families face the likelihood of food shortage as dry spells and fall army worm attacks in the country may destroy 645 000 hectares of crops which will affect  the 6.1 percent economic growth that the government has been projecting for the year under review.

The depressing figures Mwanamvekha read in Parliament call for government to put the national response in order in readiness for the forecast food crisis.

Reacting to the ministerial statement, Parliamentary Agriculture Committee chairperson Joseph Chidanti Malunga advised government to give the correct numbers of those affected to avoid the 2015/16 situation when the government overestimated the figures.

The overestimation led to Agricultural Development and Marketing Corporation (Admarc) incurring loans to buy more maize to avert hunger which also led to ‘Maizegate’- the misprocurement of maize in Zambia that led to the dismissal of  former Minister of Agriculture George Chaponda and  prosecution is under way.

Malunga also faulted the Farm Input Subsidy Programme (Fisp), arguing that billions of kwacha have gone into the programme with little impact while more billions are also invested in bailing out the same people in times of crises.

“We need to talk about where we put our resources. Otherwise, we keep putting ourselves at the mercy of nature,” he said.

Meanwhile, Finance Minister Gondwe has  outlined cautious spending plans to a nation bracing food shortages .

He points out that  Malawi’  fiscal position is under pressure from a weakening domestic revenue collection and high interest rates on Admarc loans.

Government had projected a K980 billion domestic revenue collection by June 30 2018 but the Malawi Revenue Authority (MRA) has not performed as expected.

From a target of K451 billion for the first half, July to December, MRA has only collected K410 billion, according to MRA’s revenue report issued last month.

Gondwe said as government ponders on early purchases of maize, he is expected to move money around to allocate funds that can be used to address the dry spell .

Budget and Finance Committee of Parliament chairperson Rhino Chiphiko said there is need to preserve state coffers, saying  too much domestic borrowing is harming Malawi’s economy.

He said as quoted by the local press that the domestic debt has largely been fuelled by the government’s use of promissory notes that, apparently, attract some contractors to initially fund major projects, usually in the construction sector, on their own before they recoup their investments.

Chiphiko said when the contractors finally demand their payments, the interest and other add-ons tend to be exorbitant, saying a project that may have been estimated at K39 billion could later see the government paying as much as K80 billion.

He said: “This trend of issuing out-of-budget zero coupon bonds [the promissory notes] became popular some three years ago. Unfortunately, this is continuing and it is draining the country’s cash flow.

“This will kill this country economically. It means we will not have a balanced budget for a long time and it will mean us committing all our future revenue to only paying interest rates to our debts.”

Opposition Peoples Party (PP) parliamentary leader Ralph Mhone said many in this country are struggling.

He said the country  is marked by growing inequality and people have  been let down.

Minister of Finance, Economic Planning and Development Goodall Gondwe is next week Friday expected to table a statement summarising observations on the economic trends and activities that prevailed during the first half of the budget implementation.

Parliament will then consider and adopt revised estimates on the recurrent and development accounts of the budget.

 

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Lulu
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Lulu

Does Government realize that most companies are not paying tax because of low productivity and also are being owed a lot of money by the same Government?

Nalingula
Guest
Nalingula

What technical issues?Does it require any economics to know that Malawi’s inflation is maize based.Buy maize at the lowest prize possible. Make sure that farmers don’t have money for next season to buy fertilizer.Ignore mbozi for a year so that they spread to as many districts as possible. Make sure that irrigation is ignored .Then declare that there is hunger.That is how we run a vision less African country called Malawi.

Vytowa
Guest
Vytowa

Kodi amangwetu tizingokhalira MA excuse womwewa year in and year out. It seems people we entrust with power are clueless. Madandaulo tho Koma kulirila Kuti muyendese boma. ufiti chani?

Hawkins
Guest
Hawkins

This is the old man who keeps on preaching about the single digit inflation, now the economy is over stressed, a, a. So this single digit inflation is just on paper, it isn’t reflecting of what is on the market, oooh, God help Malawi.

Mbofayani
Guest

Don’t demonstrate your Ignorance on Economic Front . You are better placed to speak about Gule wamkulu than poking your nose in Very Technical Issues.
What the old man is doing you can not even do a third of it let alone understand it. close your toilet and focus on what you are competent on !

Good
Guest
Good

The old man is useless

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