Malawi Confederation of Chambers of Commerce and Industry (MCCCI) and Economics Association of Malawi (Ecama) say they expect the 2019/20 National Budget to be revised downward in view of revenue underperformance.
Their views come at a time members of Parliament are expected to meet for the Mid-Year Budget Review from February 10 to 28.
Ecama executive director Lauryn Nyasulu said in an interview yesterday that one of the key assumptions in the current budget was a lower deficit and borrowing.
She said this has not been achieved in the first half evidenced by the increase in domestic borrowing.
Said Nyasulu: “This [domestic borrowing] has the potential to undermine the benefits of macroeconomic stability, which we have had for the past years.
“It is important to ensure that the development budget financed by government does not suffer serious cuts as this affects development.”
Nyasulu said as it stands, government needs to improve its revenue projections, which form the basis for budget formulation and improve revenue mobilisation and efficiency.
MCCCI chief executive officer Chancellor Kaferapanjira said in a separate interview the chamber expects a downward revision in revenue and taxes.
He said target for revenue will likely be adjusted downwards as major companies are expecting profit declines; hence, the need to relook into this to reflect reality on the ground.
“It is, therefore, up to government to critically look into this matter by reviewing tax targets or vigorously work to end smuggling otherwise banking highly on domestic revenue will only threaten the budget,” he said.
University of Malawi’s Chancellor College economics professor Ben Kaluwa said Treasury would have difficulties to achieve its key objectives of an investment budget.
He said increased domestic borrowing is due to underperformance of revenue collection in the first half of this financial year.
Said Kaluwa: “We are actually aware that we will have over expenditures on some areas particularly because of the natural disasters that the country is facing.”
In September last year, Treasury posted a K17. 7 billion budget deficit compared to K41.1 billion in August, according to the Reserve Bank of Malawi.
The deficit was, however, lower compared to the K34.1 billion posted in July, the first month of the 2019/20 fiscal year due to under collection of revenue by Malawi Revenue Authority.
Come October, revenues declined by K11.3 billion to K98.8 billion on account of declines of K10.4 billion and K890.1 million in domestic and foreign receipts to K90.5 billion and K8.3 billion, respectively.