The Economics Association of Malawi (Ecama) has faulted the proposed 2018/19 National Budget for targeting short- term measures which makes the fiscal plan consumption based.
Responding to questions yesterday on the contents of the proposed budget presented in Parliament in Lilongwe on Friday, Ecama president Chikumbutso Kalilombe observed that while the fiscal plan covers some needs, mostly for consumption, there is little on long-term structural needs to shape the economy going forward.
He expressed surprise at government’s assumption to grow revenue considering the challenges experienced during the current budget such as power outages.
Said Kalilombe: “It [the proposed budget] covers some needs of the populace, but these appear mostly consumption needs with little on long-term structural needs to shape the economy going forward.
“We have been advocating direct investment into energy, but as rightly put, this does not appear in the budget. Possibly government is happy and puts all trust in developments taking place in the sector. However, these need to move fast as without reliable energy we can’t achieve meaningful growth.
“This [energy crisis] is affecting already existing industries’ output which hinders both foreign and local investment into the economy which would have spurred the much-needed growth.”
In the proposed budget, Minister of Finance, Economic Planning and Development Goodall Gondwe has projected a 7.5 percent revenue growth from last year.
But Kalilombe doubted if the projections have a solid base.
Gondwe on Friday tabled a K1.5 trillion budget, which is 13 percent higher than the K1.1 trillion 2017/18 revised budget. The proposed budget represents 22.8 percent of the gross domestic product (GDP), which Gondwe believes will spur economic growth and address concerns on the rising cost of living.
Of the K1.5 trillion total expenditure and net lending, K1.1 trillion is recurrent expenditure and K391.7 billion is development expenditure with deficit pegged at K242 billion.
Gondwe has given Malawi Revenue Authority (MRA) a tax revenue target of K940 billion while K112.2 billion is expected to come from non-tax revenue.
Ecama says the proposed budget has, among other things, fallen short on health sector budget, electricity investments, development projects budget and private sector growth, but has included new programmes such as K33.5 billion for 2019 Tripartite Elections and K9 billion for tree planting and internships to benefit the youth.
But Gondwe defended the proposed budget, saying: “My statement, therefore, will not be an all embracing plan of what is planned to be done and policies for the entirety of the economy. An annual budget is an account of what the government intends to do in a given year and does not pretend to cover all elements of what should be done in the country.” n