Treasury has started the second half (H2) of the 2020/21 financial year with a 30.6 percent or K45.8 billion revenue decline despite some good performance in the domestic revenue lines, published Reserve Bank of Malawi (RBM) figures show.
At the start of the second half in January 2021, Treasury collected K97.9 billion in domestic revenues, a 2.7 percent or K2.5 billion increase from the previous month, thanks to increase in tax revenues.
During the month under review, tax revenues rose by 2.9 percent or K2.7 billion to K95 billion while non-tax revenues decreased by 4.9 percent or K100 million to K2.9 billion.
However, despite the increase, the RBM figures show that total revenue collections for January 2021 decreased by 30.6 percent to K103.9 billion.
This is in contrast to an increase of 59.8 percent or K22.0 billion recorded in December 2020.
Reads the RBM January Monthly Economic Review in part: “The drop in revenue collections was mainly as a result
of a decrease in foreign receipts which outweighed the increase in domestic revenue collections during the month.
“Meanwhile, foreign receipts declined by 88.9 percent or K48.3 billion to K6 billion [$7.7 million], from K54.4 billion [$70.5 million] reported in the preceding month.”
During the month under review, expenditures declined by 16.8 percent or K39.0 billion to K192.9 billion from K231.9 billion registered in the preceding month with recurrent and development expenditures dropping by 15.2 percent and 35.8 percent to K180.8 billion and to K12 billion respectively.
During the second half, total revenue and grants are projected at K875.8 billion of which K621.6 billion is domestic revenue and K254.2 billion are grants.
Total expenditure and net lending is projected at K1.336 trillion of which K888.1 billion is recurrent expenditure and K447.4 billion is development expenditure.
On account of developments in both revenues and expenditures, total deficit for the 2020/21 fiscal year has been projected as K810.7 billion or 8.8 percent of gross domestic product.
Minister of Finance Felix Mlusu said in the 2020/21 Mid-Year Budget Review Statement that the projected budget performance for the second half has been drawn with full consideration of developments during the first half, remaining government payment obligations and expected continued improvement in revenue inflows.
He said government will continue with its efforts to enhance domestic revenue collection to achieve set targets for smooth budget implementation.
“In this regard, the Malawi Revenue Authority will continue implementing turnaround strategies aimed at achieving efficiency and enhanced tax payer compliance,” he said.
Earlier this month, the International Food Policy Research Institute projected that Treasury could lose between K128 billion and K179 billion in revenues in the 2020/21 financial year due to the impact of the Covid-19 pandemic that has subdued revenue collection. n