Covid-19 induced losses Narrowing—treasury
Ministry of Finance says monthly average revenue collection losses due to the impact of the Covid-19 pandemic are narrowing with figures showing an improvement from K12 billion to K5 billion per month.
The ministry’s spokesperson Williams Banda said the figures are a comparison of the state of revenue collection from pre-Covid-19, when cases were rising and post-Covid-19 pandemic when cases are now declining.
He was speaking in an interview in Salima on Friday on the sidelines of the Unicef-funded National Budget Process Orientation Workshop for Association of Business Journalists (ABJ).
Said Banda: “Our analysis shows that from March after the country registered Covid-19 cases, there has been monthly average revenue losses in the region of K12 billion per month.
“Now the situation is improving as the average monthly loss is around K5 billion and we are hoping for the best.”
The revelation comes after Treasury admitted that between January and July this year, revenues dropped by 11 percent which affected anticipated revenue collection in the 2019/20 fiscal year.
This is also happening as businesses are opening up to trade as Covid-19 cases are on the decline and countries that were on lockdown are now opening up for business.
Reacting to the development, Centre for Research and Consultancy executive director Milward Tobias said in a written response that the improved revenue collection is encouraging.
He said this is good for budget execution and also a sign that the economy is on the recovery path.
Tobias advised authorities to ensure efficiency in utilisation of money.
He said: “We have said before that the 2020/21 National Budget has a revenue target that is likely to be unattainable. Recent reports by the central bank show a decline in revenue.
“We have also said before that the 2020/21 Budget is insensitive to effects of Covid-19 as it has a relatively low allocation to development expenditure, which would stimulate the economy.”
Tobias observed that with the national budget is already passed, the available window to optimise on is efficiency enhancement.
On his part, Betchani Tchereni, associate professor of economics at The Polytechnic—a constituent college of the University of Malawi, said the major concern is that with low revenue collection, government should exercise discipline by taming the huge appetite for borrowing.
He said: “Unsustainable debt must be avoided at all cost, even if it means having to wait before certain projects take place”.
On the workshop, ABJ national coordinator Vincent Khonyongwa admitted that much as business and economic journalists have reported on the national budget, there is still room for improvement; hence, the training was important.
In its Monthly Economic Review Report for August 2020, the Reserve Bank of Malawi indicated that budgetary operations for the central government closed with a deficit of K6.5 billion in August, a drop from a deficit of K35.3 billion recorded in the previous month.
