Malawi lacks sound economic management -Britain

Britain’s Department for International Development (DfID) head in Malawi, Sarah Sanyahumbi, has added her voice to the chorus that the zero-deficit national budget has been a disaster that has resulted in economic hardships for the majority of Malawians.

But Minister of Finance Ken Lipenga presenting a Mid-Year Review of the Budget in parliament on Friday,  painted a different picture, saying the implementation of the first half of the 2011/12 zero-deficit national budget has been successful.

“The zero deficit budget  (ZDB) is something that I think donors have alot of concerns about,” Sanyahumbi said.

Sanyahumbi: People are struggling

“We would want to see a more realistic budget that is manageable,” she told Capital FM Straight Talk programme.

“On the economic side look at the situation in the country at the moment, this is not sutainbale. There is complete lack of forex, there is complete lack of fuel, prices are going up, people are  struggling,” DfID head said.

She said companies have “been telling us they have to lay-off staff” forcing thousands to join the unemployed ranks.

“Things are really difficult for the people. So clearly something isn’t right,”said  head of DfID mission in Malawi.

Sanyahumbi said the turmoil is due to “lack of plan, lack of sound economic management.”

She aso disagreed with Malawi on the exchange rate, saying Kwacha was overvalued.

Lipenga says ZDB acheived

Delivering a Mid-Term Budget review, Finance Minister Lipenga said the ZDB has perfomed well.

“Mr. Speaker, Sir, as a result of strong performance in domestic revenues as well as prudent management of expenditures, the Zero Deficit Budget performed well above expectations,” said Lipenga.

“Recurrent expenditures were K120.05 billion against total domestic revenues of K120.09 billion, implying that domestic revenues exceeded recurrent expenditures by K40 million,” he said.

Lipenga insisted the ZDB has been a success story.

“Basing on a definition that recurrent expenditures are financed from domestic resources while development budget expenditures are financed from both domestic revenues as well as foreign receipts, then clearly the Zero Deficit Budget has so far been achieved,” he said.

“To the end of the Fiscal Year, the Budget process is expected to continue performing well considering that expenditures are normally lower than revenues in the second half of the Fiscal Year. This is based on historical and empirical data,” said Lipenga.


The Finance Minister said under the ZDB, government successfully implemented the 7 percent salary increase for all Civil Servants in Government Ministries and Departments.

He also said government also paid monthly rural teacher allowances and arrears to all eligible teachers.

“As at 31st December 2011, up to K34 billion of Government own generated resources were used to pay salaries for public sector workers and allowances for rural teachers,” Lipenga told the House.

He also said processes for recruiting professionals in various Ministries and Departments also progressed very well in the first half of the fiscal year.

“Notable Institutions that are undertaking major recruitment drive include; Ministry of Health, Ministry of Education, Science and Technology, Malawi Defense Force, Malawi Police Service, Immigration Department, Accountant General, Ministry of Agriculture, Irrigation and Water Development and the Anti Corruptions Bureau,” said Lipenga.

He said detailed accounts of how many professionals have been hired by these Institutions in this Fiscal Year will be presented in the main Budget Session of Parliament later in May this year.

Malawi adopted the ZDB fiscal plan after donors pulled out budgetary support due to governance and human rights concerns.

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