Finance Minister Dr. Ken Lipenga has hinted that the 2012/13 national budget will be a recovery or an austere budget due to the economic challenges gripping the country.
The minister said this on Wednesday when he conducted the second pre-budget consultations meeting in Lilongwe which was done concurrently with a similar meeting in Mzuzu.
Said the minister: â€œThe 2012/13 budget will be a recovery and austere budget in view of the economic challenges that the country is currently going through.â€
Lipenga said there will be fiscal tightening in the next financial plan, which he said will constitute more of a recovery and restorative budget that will likely not include new projects.
This means that Malawians should brace for likely cuts in some top priority areas in terms of resource allocation in the next budget.
But the minister said agriculture and health sectors will continue to enjoy larger allocation considering the impact they have on economic development and general standards of living.
He said services that benefit the poor in both urban and rural areas will be given priority in terms of resource allocation.
Lipenga said this will be done through programmes such as Social Cash Transfers, Farm Input Subsidy Programme, the Public Works Programmes and nutrition, especially for school-going children.
He said due to fiscal slippages that characterised the zero-deficit budget, the anchor for the next fiscal policy in the next budget is minimal financing through domestic borrowing.
During the meeting, Malawians, led by the Malawi Economic Justice Network (Mejn) and the Economics Association of Malawi (Ecama), gave input into the formulation of the next budget by Ministry of Finance.
Opening the pre-budget consultation in Mzuzu, Deputy Minister of Finance Ralph Jooma said the new government inherited debt of over $350 million, which it has to service.
â€œThere is a $350 million which government has to pay. The previous administration got supplies from foreign companies, but failed to pay due to lack of forex. So some of the forex we will get from donors and generate locally…will go to servicing this debt,â€ said Jooma.