Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has faulted the proposed 2019/20 National Budget for assuming a rosy picture in a year when the business environment is hostile.
In its 2019/20 National Budget Analysis, MCCCI chief executive officer Chancellor Kaferapanjira observed that while there have been a few positive tax policy measures, overall, there are more punitive measures than positive ones.
He said that it is clear the intention of Treasury is to raise more money for government and at any cost.
Kaferapanjira said this is reflected in the estimated domestic revenue of K1.4 trillion, comprising K1.3 trillion as tax revenue and K55.8 billion non-tax revenue, despite Malawi Revenue Authority managing to collect only K1 trillion in the previous budget
He said: “Even if inflation and the unlikely-to-be achieved projected GDP [gross domestic product] growth of five percent are built in, the increase is over-ambitious especially because the economic environment has become hostile as reflected in declining profit by major taxpayers.
“The major risk of maintaining this estimate is that the expenditure side, which may be committed, will not be controlled. As such, the economy will end up with another enormous budget deficit compared to that which has been projected.”
As the success of any economy is primarily measured by an increase in the GDP, Kaferapanjira said the question remains why these “positive” economic developments have not led to improvement in economic growth, which has remained subdued during this period.
For instance, GDP has grown from 2.1 percent in 2012 to 6.3 percent in 2013, before partly declining to six percent in 2014 and falling further to 3.1 percent in 2015 and 2.9 percent in 2016.
In 2017, growth rose to 5.1 percent and declined to 4.1 percent in 2018.
Kaferapanjira said if government is serious about delivering on its budget theme and objectives, it must champion generation of electricity through Energy Generation Company of Malawi Limited, stop formulating policies that tamper with private sector operations without honest consultations and fight corruption.
In his 2019/20 National Budget presentation last week, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha said if the assumptions do not materialise, they form part of risks to budget implementation.
“Government will therefore work earnestly to minimise the risks,” he said.