National News

Malawi budget faces K41.1bn deficit

Ministry of Finance figures show that the 2011/12 national budget expiring this June 30 will generate domestic revenues amounting to K201.3 billion (about $805.2 million), down from the projected K242.4 billion (about $969.6 million).

This means that the budget will have a deficit of about K41.1 billion (about $164.4 million).

The Malawi Economic Justice Network (Mejn) said this during a meeting with the Budget and Finance Committee of Parliament in Lilongwe on Tuesday—ahead of the 2012/2013 budget session set to be officially opened by President Joyce Banda on Friday.

A Ministry of Finance document presented to key donors recently also revealed a projected government over-expenditure by K13 billion (about $52 million).

The situation is likely to lead into an increase in government borrowing to close the gap and Mejn executive director Dalitso Kubalasa told the meeting that the situation confirmed fears on how the zero-deficit budget (ZDB) would be financed.

“This is a very sad situation and it means that government has to find ways and means of financing the deficit. At the moment, we are not sure what will be done to close the gap,” he said.

The deficit revelations come hot on the heels of cooked-up figures to paint a rosy picture of the ZDB financing, including the scandal by the Malawi Revenue Authority (MRA), whom Minister of Finance Ken Lipenga said borrowed from commercial banks to cover the budget shortfalls.

A document presented to a recent Common Approach to Budget Support (Cabs) meeting by Ministry of Finance budget director  Dr Dalitso Kabambe revealed that taxes to be collected by MRA would be short by K29 billion after a projected collection came down to K174.5 billion from the projected K203.5 billion whereas non-tax revenue will be K12.1 billion less than projected.

Kabambe told the Cabs meeting last week that the below par non-tax revenue collections were mainly due to the fuel levies’ shortfall after out of K11.7 billion planned receipts from the levies,  only K5.5 billion is projected to be realised.

The document also revealed that this fiscal year, expenditures will likely reach K313.5 billion, up from K300.5 billion as revised at the mid-year budget review.

Kabambe said recurrent expenditure is projected to be K244.9 billion, exceeding revised estimates by K15.8 billion while expenditure on development projects will go down to K68.5 billion against a target of K70.2 billion.

During the meeting with the Budget and Finance Committee, Kubalasa presented, among several other issues, proposals for the new budget which include a review of the fuel levies after observing that
some of these were unnecessary and punish the consumer.

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