Domestic revenue up 4.6%

Treasury recorded a 4.6 percent rise in domestic revenue to K114.9 billion in September 2021, thanks to increased tax collections, published Reserve Bank of Malawi (RBM) figures have shown.

In its September, 2021 Monthly Economic Review,  RBM said during the month under review,  tax collections increased by 2.8 percent to K109.1 billion while non-tax collections increased by 55.3 percent to K5.8 billion.

However, total revenue mobilisation declined by 3.3 percent to K125.8 billion in September 2021.

Reads the review, in part: “The decrease in total revenues reported in the month under review was attributed to a decline in foreign receipts which more than outweighed an increase in domestic revenue collections.

“Total government expenditures recorded an increase of 37.8 percent to K192.5 billion in the month under review, with both recurrent and development expenditure lines contributing to the increase.”

During the month under review, recurrent expenditures surged by 34.6 percent to K163.1 billion, mainly as a result of increases in generic goods and services, and salary payments, which increased by 84.5 percent to K45.8 billion and 51.4 percent to K57.5 billion, respectively.

Ironically, Treasury closed the first quarter of the 2021/22 fiscal year with a deficit of K125.9 billion compared to a deficit of K56.89 billion recorded in the last quarter of the previous financial year.

During a similar quarter of the 2020/21 fiscal year, government operations resulted into a narrower deficit of K61.97 billion.

The 2021/22 National Budget, framed at the height of subdued economic activity due to the impact of the Covid-19 pandemic, projects a budget deficit of K718.3 billion, or seven percent of the rebased GDP during the initial budget design framework.

Economics Association of Malawi executive director Frank Chikuta urged government to work hard to ensure that the deficits are reduced to sustainable levels to avoid a public debt crisis.

He said: “The budget deficit is very high and unsustainable by all standards.

“For instance, in the Southern African Development Community, macroeconomic convergence criteria the upper limit for budget deficits is three percent of gross domestic product.”

On his part, Malawi University of Business and Applied Sciences associate professor of economics Betchani Tchereni said a rising fiscal deficit disturbs the macro-economic environment as financing deficits is mostly done through borrowing on the financial market within the country.