Development projects in the 2013/14 budget struggled in the third quarter—January to March 2014—largely due to donor aid suspension to Malawi, according to the 2013/14 budget performance quarterly report (Q3).
The report, posted on the Malawi’s Ministry of Finance, Economic Planning and Development website, indicates that the government planned to spend K40 billion, comprising K5 billion from domestic resources and the rest was from foreign sources.
However, during the period the government only managed to spend K21.2 billion, slightly over half the budget, indicating an under-expenditure of K18.8 billion.
The report has explained that the under-expenditure was on account of corresponding low inflows under grants, leading to delayed funding which in turn affected funding levels.
In November last year, donors under the Common Approach to Budget Support (Cabs) announced the withholding of $150 million aid due to Cashgate which has seen government departments struggling to meet their budget requirements.
The budget performance report, however, notes that under-expenditure on the development budgets has serious consequences on contractual obligations, especially under the infrastructure development projects.
The government has warned that the delayed payments would result in cost escalation for the projects due to claims on idle time which would lead to the taxpayer paying more.
Minister of Finance, Economic Planning and Development Goodall Gondwe, speaking in Blantyre on Thursdayduring a pre-budget consultation meeting, said regardless of the aid suspension, there will be a normal budget.
He, however, said Malawians should expect a budget with a development allocation of about K162 billion with K53 billion generated from local sources.
According to Gondwe, this fiscal year’s budget is estimated at K743 billion.
Due to the aid freeze, government has noted that it is grappling with mounting domestic debt which now stands at K340 billion and arrears that have risen to K173 billion.
According to the Q3 budget performance report, expenditures were contained within the targets, but significantly below the target due to lower than anticipated inflows from development partners and domestic collections.
During the quarter, total expenditure was K135.7 billion with K114.4 billion for recurrent and K21.2 billion development budget.
However, the revenue outturn for the quarter was K97.7 billion from tax revenue and K6.7 billion from non-tax revenue, reflecting a favourable performance of K7.7 billon and K0.7 billion respectively.