Friday, March 5, 2021
  • About Us
  • ImagiNATION
  • Adverts
  • Rate Card
  • Contact Us
The Nation Online
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Opinion
  • Sports
  • Chichewa
  • Enation
No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Opinion
  • Sports
  • Chichewa
  • Enation
No Result
View All Result
No Result
View All Result
Home Business Business News

Lack of budget support Affects economy—IMF

by Orama Chiphwanya
05/07/2018
in Business News, Front Page
2 min read
0
Share on FacebookShare on TwitterShare on WhatsAppShare on LinkedinLinkedinShare via Email

 

International Monetary Fund (IMF) country representative Jack Ree says the absence of direct budget support for the past four years has inflicted pain on the country’s economy.

RelatedHeadlines

Probe exposes ‘rot’ In SA lawyers’ deal

Ministry plans to export 1m tonnes surplus maize

Banks’ profitability, assets rise, says RBM

In an interview on Tuesday, the IMF official was, however, upbeat that things may turn the corner, saying there is potential for the country to do even better in the absence of budget support.

“Experience in the region suggests that countries can become financially independent only when it can raise financing from the financial market.

graph | The Nation Online

“This would require, among other things, strong and prudent fiscal and monetary policies and a track record of robust economic performance which leads to confidence building,” he said.

Ree admits revenue under-collection is expected to prolong for some time.

Malawi Revenue Authority (MRA) has attributed subdued revenue performance to power outages, which has affected companies’ production.

Ree is banking hopes on the new three-year Extended Credit Facility (ECF) programme, saying it has been designed to provide the starting point for the country to be financially independent and to anchor fiscal deficit targets.

In the absence of direct budget support, Treasury has resorted to domestic borrowing, which crowds out the private sector.

This fiscal year, domestic debt is projected to rise by 473.6 percent as government plans to borrow K176.1 billion compared to K30.7 billion in the revised 2017/18 national budget.

In an interview, University of Malawi’s Chancellor College economics professor Ben Kaluwa said the absence of direct budget support has put government under pressure, making it unable to achieve its goals.

“In its desperate state, government has been setting targets for revenue which are unrealistic for MRA given the state of the economy.

“The absence of donor aid has also seen government resorting to borrowing, but this is not sustainable because debt has to be repaid with interest which means government has to raise more to service the loans,” he said.

But economic statistician Alick Nyasulu said as domestic revenue seems to be a viable source of revenue for the country, there is need to modernise and formalise the economy.

He said: “We need to know that a big chunk of the economy is informal, including the mainstay, agriculture. Most of the informal sector does not pay taxes, but it is well captured in official statistics.

“It is difficult to expand the tax base when a major part of the economy is informal. You only end up overtaxing the few formal businesses. We ought to look at these issues as this is the only way we are going to wean ourselves from donors.”

Minister of Finance, Economic Planning and Development Goodall Gondwe has, however, maintained that the country’s public finance management reforms have reached acceptable stage and that government is on course to recreate a conducive macroeconomic framework.

He said because of this, donors will likely bounce back. n

Previous Post

AG snubs parliamentary committee

Next Post

Creating subject matters experts in your team

Related Posts

Chizuma: Made recommendations
National News

Probe exposes ‘rot’ In SA lawyers’ deal

March 5, 2021
Lowe: We are trying to find potential markets
Business News

Ministry plans to export 1m tonnes surplus maize

March 5, 2021
Banks remained robust in 2020 amid Covid-19
Business News

Banks’ profitability, assets rise, says RBM

March 5, 2021
Next Post

Creating subject matters experts in your team

Opinions and Columns

In pursuit of development

The future of aid

March 4, 2021
Business Unpacked

Take time to know your pension’s worth

March 4, 2021
Rise and Shine

How do successful people think?

March 4, 2021
My Turn

Unmasking Covid-19 vaccine

March 3, 2021

Trending Stories

  • Under probe: The Reserve Bank building in Mzuzu

    Exclusive: RBM’s Mzuzu branch payment mess exposed

    0 shares
    Share 0 Tweet 0
  • Minister wants Msundwe police officers prosecuted

    0 shares
    Share 0 Tweet 0
  • Charcoal traffickers fined K800 000, vehicle forfeited

    0 shares
    Share 0 Tweet 0
  • Macra to introduce fees for phone numbers

    0 shares
    Share 0 Tweet 0
  • Govt to finance 15 major projects

    0 shares
    Share 0 Tweet 0
  • Values
  • Our Philosophy
  • Editorial policy
  • Advertising Policy
  • Code of Conduct
  • Plagiarism disclaimer
  • Disclaimer
  • Privacy Policy
  • Terms of use

© 2021 Nation Publications Limited. All Rights Reserved.

No Result
View All Result
  • Home
  • News
  • Politics
  • Business
  • Entertainment
  • Life & Style
    • Every Woman
      • Soul
      • Family
    • Religion
    • Feature
  • Society
  • Opinion
  • Sports
  • Chichewa
  • Enation

© 2020 Nation Publications Limited. All Rights Reserved.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.