Malawi President Peter Mutharika has appealed to citizens and corporate organisation not to evade tax, saying the government needs to collect enough revenue to run the affairs of the country after it adopted the zero aid budget.
He said Malawians should understand the obligations of being a good citizen and pay tax to run the state operations.
“Let us all pay taxes to have some money to run the country. We are now on our own there is no one who is going to give us money” said Mutharika.
He admitted for the first time that Western donor nations and agencies, who bankroll up to 40 percent of the national budget, are not ready to bail out Malawi any time soon.
“We’re on our own; nobody is giving us any money,” President Mutharika said at a rally he addressed in the eastern town of Balaka. “We just have to work hard and pay tax.”
Donors are withholding 40% of budgetary support following allegations of corruption and systematic looting of state resources by senior civil servants and politicians.
The budget has been called “zero-aid”, and it has a 107billion kwacha (£167m) deficit. So far, the government has not explained how it will cover the deficit.
Critics predict that the government may eventually have to raise taxes, increase fees for government services, and resort to local borrowing to plug the deficit.
It is not the first time Malawi has had to do without some budget support. During the 2011-12 fiscal year, under President Bingu wa Mutharika (the current president’s older brother) donors withdrew budgetary support because of poor governance and the then president’s increasing autocracy. He resorted to a “zero-deficit” budget in defiance of the donor community, implying Malawi could do well enough on its own.
The zero-deficit budget led to fuel shortages, erratic power supplies and the scarcity of commodities such as sugar. This was largely caused by lack of foreign exchange to import goods and raw materials.