Malawi President Joyce Bandaâ€™s Cabinet on Wednesday approved the 2012/13 national budget, Finance Minister Dr. Ken Lipenga has said.
Said Lipenga in a brief response: “I can confirm that Cabinet has today [Wednesday] approved the budget and that it will be presented this Friday.”
Speaker of Parliament Henry Chimunthu Banda also made the announcement later in the House.
The new budget is coming two months after Banda assumed the presidency following the death of Bingu wa Mutharika on April 5 2012.
It also comes at a time the Head of State is consolidating her power at Capital Hill and on the international stage through swift personnel changes and a new look foreign policy.
But the budgetâ€™s key backdrop is the dire economic situation that has pushed up the cost of living, made foreign currency and fuel scarce as well as sent businesses to their knees as the zero-deficit budget (ZDB)-induced taxes still weigh heavily on households and firms.
On the macroeconomic front, the kwacha has lost at least 50 percent of its official market value over the past one month; the inflation rate currently stands at 12.4 percent and is targeted to average 15 percent by December this year.
The bank rate now stands at 16 percent after the Reserve Bank of Malawi (RBM), in an attempt to slow down a galloping inflation, raised it by three percentage points or 23 percent. Gross domestic product (GDP) slowed to 4.3 percent in 2011 from 6.7 percent in 2010, with analysts predicting that growth will slacken further in 2012.
Given this situation and the high expectations that come with a new government, Lipenga is under pressure to show how his budget will help relieve the pain that most Malawians are going through.
He will have to balance the need for austerity in the face of tight finances and the urgent need to revamp economic growth through social and public investments that create jobs.