Speaking during presentation of the Mid Year Budget Review statement in Parliament on Friday, Finance Minister Goodall Gondwe noted that at the rate that the annual borrowing is being reduced and at the rate which nominal GDP is growing, the ratio can be reached in about 3 year’s time.
He dismissed assertions from certain quarters on government’s appetite on domestic borrowing; arguing that it has steeply declined from K94 Billion in the 2014-2015 financial year, down to K37 Billion in 2016/2017 and to a planned K28 Billion in 2017/2018 fiscal year.
Among others he stated that the budget has suffered two shocks such as excess in expenditure from ADMARC’s bailout of K45.2 Billion, and the under-performance in the revenue collection of close to K45.9 Billion in the first half of the year.
He pointed out that at the end of the first half of 2017/2018, under collection of revenue amounted to K45.9 Billion of which K38.1 Billion, was tax under collection and K7.8 Billion was the non tax revenue under collection.
Gondwe was however upbeat that with a number of economic measures aimed at eliminating power outages, tax collection will be normalized in the second half of 2017/2018, and expected to roughly yield K70 Billion.
He announced that Malawi is expected to receive budgetary support of K60 Billion from the World Bank in the course of the second half of the year.
The Finance Minister also outlined measures to reduce travel related budgetary lines which include a 20% reduction in fuel allowances across the board, and a deep cut in the number of personnel unofficially provided with motor vehicles.
He further stressed that government will not pay for the maintenance of such motor vehicles.
Other measures include the curtailing and limiting of business class travel, and that controlling officers will reduce the number of official missions in response to the cuts made to their votes.
The review will result in a small reduction of the budget by approximately K9.3 Billion while total revenues and grants will register a small increase of K2.6 Billion.
On the maize situation, Gondwe assured that 90 metric tonnes of maize remains unsold and is part of the food reserve available to the country, together with an amount of 182, 000 tonnes purchased by the National Food Reserve Agency (NFRA) translating to a total maize reserve of 272, 000 metric tonnes.
He stressed that currently there is no food shortage in the country; adding that the effects of dry spells and fall armyworms being experienced, could impact on the country later on.
He however acknowledged that food shortages will occur in a number of areas, and that there is need to put measures to mitigate a likely food disaster.
Gondwe explained that funds have been set aside to purchase a further 200,000 metric tonnes of maize to enable the grain marketer and NFRA to start purchasing available maize stocks immediately and for transportation.
According to him the budget deficit is programmed to improve from K195.6 Billion down to K183.6 Billion.
He briefed members that an International Monetary Fund (IMF) mission confirmed an estimated inflation figure of 11% this year against 20% in 2016.
Gondwe further stated that the mission forecast that if Malawi’s macroeconomic status is well managed, there is a projected economic growth rate of 7%.