Economists have tipped Treasury to develop a 2021/22 National Budget that will spur economic development by providing private sector incentives and allocating more resources to productive sectors.
Currently, the Ministry of Finance is conducting pre-budget consultations for the 2021/22 National Budget.
The advice come as economists have described the current 2020/21 K2.33 trillion fiscal plan as consumptive, with only K615.8 billion, or 26 percent of the budget for development.
The fiscal plan also has a projected record deficit of K810.7 billion, representing 8.8 percent of the country’s gross domestic product (GDP).
The deficit, according to Ministry of Finance, is expected to be covered through foreign financing of K246.3 billion and the balance of K564.4 billion through domestic borrowing.
In an interview on Tuesday, economist Milward Tobias, who is also executive director of Centre for Research and Consultancy, said allocating more resources towards landmark development projects and awarding private sector incentives through the budget will present multiple benefits in terms of job creation and industrial revolution.
This, he said, will reduce unemployment levels and help the economy to quickly recover from Covid-19 by complementing success outcomes from the agriculture sector.
Tobias advised the government to ensure that Malawi 2063, the country’s long-term development blueprint, should anchor the budget and ensure domestic financing of projects to bring impact.
He urged government to reduce the number of vehicles used merely to transport civil servants, which would save maintenance and fuel costs.
“We already have fleet management policy in place which was introduced as part of public reforms. This area of reforms stalled because government was consulting the same reluctant beneficiary civil servants,” said Tobias.
He further advised government to build its own offices to cut on rentals which he said accounts for K9 billion annually.
Tobias also advised Treasury to provide tax incentives to the private sector such as waiving taxes on manufacturing machinery so that companies import equipment to start massive production which in turn provide government revenue through taxes on products and Pay As You Earn.
Associate professor of economics at the Polytechnic Betchani Tchereni said if the economy is to boom, investing in productive sectors remains crucial.
He advised government to invest in real sector where more jobs will be created, arguing that studies have shown that the services sector is already thriving.
Tchereni advised government to focus on supporting locally-owned companies because their proceeds will remain in the country and sustain the economy.
“We have seen that consumption triggers production; hence, investment into real sector will provide more jobs and people will have disposable income,” he said.
The private sector has been lamenting lack of incentives such as review of taxes as majority of the companies have been struggling and scaling down due to Covid-19.
Minister of Finance Felix Mlusu said all views from experts and the public will be consolidated.