Malawi has cut its national budget by K16.5 billion because it cannot collect the money due to reduced economic activities brought in by fuel and foreign exchange scarcity.
The budget was brought last year and it was branded a zero-deficit budget as it was supposed to run on locally generated resources mainly from many taxes introduced last year.
This was after donors held back over $500 million, that 40 percent of budgetary support because of disagreements on macro-economic management.
However this has backfired on Malawi as it cannot collect projected taxes and revenues as economic activities dropped by 60 percent meaning people cannot get more tax paying avenues as fuel and forex vanished from the market.
Minister of Finance and Development Planning Ken Lipenga told Parliament that the budget has been reduced by K4 billion from K304 billion, but this analysts have revealed that this was meant to be the surplus.
Revenue was estimated at K308 billion but half way down the 2011/12 budget this has dropped to K287.5 billion as much revenue cannot be collected.
The original budget tabled last year did not have any revenue gap but a K4 billion surplus meant to service public debt.
In his mid year budget statement , Lipenga said Revenue collection has been revised downward by K20 billion with many activities stopped with Ministry of Health losing K6 billion of funding to get K21 billion.
Road Fund has lost K3 billion, Ministry of Finance K1 billion, Public Sector Management K3 billion, Compensation and Refunds K1 billion