GOVERNMENT BEATS REVENUE TARGET BY 0.7% IN Q1
A budget performance quarterly report published on Thursday shows government beat its revenue target by 0.7 percent in the first quarter (July to September) of 2015/16 fiscal year.
The report, which comes as Minister of Finance, Economic Planning and Development Goodall Gondwe is expected to present the Mid-Year Budget Review in Parliament today, shows government collected domestic revenue amounting to K149.8 billion (about $205.4million) against the target of K148.8 billion (about $204million).
This better than expected performance comes against the backdrop of poor revenue collection by Malawi Revenue Authority (MRA) for the past six months, largely due to subdued private sector performance.
Treasury spokesperson Nations Msowoya was yet to respond to a questionnaire yesterday to comment on the revenue performance, but University of Malawi’s Chancellor College economics professor Ben Kaluwa described the development as “a good way to go at a time Malawi is operating on a zero-aid budget”.
But he said this paltry performance could put pressure on the provision of social services as majority of Malawian rely on government for such services such as health and education.
In June 2015, Gondwe presented to Parliament a K930 billion (about $1.2billion) budget that was to be locally financed after donors withdrew about 40 percent direct budget support due to concerns of Cashgate—the massive looting of taxpayer’s money by civil servants and businesspersons.
According to the 2015/16 budget performance quarterly report, the outturn of tax revenue was K138.3 billion (about $189.6million) against a target of K137.5 billion (about $188.5million), which was buoyed by income and profits tax, particularly pay as you earn and individual benefits taxes.
The report, however, shows that taxes on goods and services, exercise duty and the international trade tax underperformed by 1.7 percent, 3.8 percent and 2.2 per cent respectively.
Non–tax revenues during the period amounted to K11.5 billion (about $15.7million) compared to the target of K11.2 billion (about $15.3million), which was an over-collection of K284 million due to the performance of the road and storage levies although departmental receipts underperformed 5.4 percent, according to the report.
However, on total expenditure including net lending and direct payments, government performed below target by spending K220.1 billion (about $301.8million) out of the targeted K231.2 billion (about $317.1million), reflecting an under expenditure of K11.1 billion (about $15.2million).
The report says government projected to use K168.9 billion to run its daily business during the quarter under review, but the outturn shows that expenditures were above the target by K3.6 billion due to payments towards interest on foreign debt, which were higher than projected.
Regarding expenditures under personal emoluments, the report shows that wages and salaries were projected at K55.5 billion, but spent slightly above the projection by 0.7 percent while other recurrent transactions for the first quarter was projected at K113.4 billion.
Reads the report: “On the expenditure side, government expenditure was below the target for the quarter. The departure from the target is significant and this may translate to low levels of services provided in terms of both quality and quantity.
“If the status quo is not reversed, the various output targets may not be achieved in this financial year.” n
