Minister of Finance Felix Mlusu says Treasury is banking on the development partners’ support towards the emergency Covid-19 response to mitigate a complete derailment of his maiden K2.2 trillion 2020/21 National Budget.
In an interview on Friday on the sidelines of a tour of Bingu National Stadium Covid-19 Isolation Centre, the minister said the budget is facing increased pressure for emergency expenditure in response to the pandemic.
He said: “Obviously, the emergency spending will affect the national budget but we are receiving very good support from our development partners.
“We believe that they will still be able to hold our hand to make sure that our budget is not derailed.
Mlusu’s admission comes at a time experts have advised Treasury to review the budget downwards to suit current hard times induced by the pandemic.
Already, the deficit in the 2020/21 Budget is pegged at K755 billion and with spending pressure, experts fear the deficit may be widening.
Centre for Research and Consultancy executive director Milward Tobias said observing keenly Treasury transactions gives the impression that principles of prudence and effectiveness are defied.
He said some clusters that are receiving funds have limited or no relevance at all; hence, the amount needed to respond to the pandemic can be less than it is, yet achieve the same goal.
The Polytechnic associate professor of economics Betchani Tchereni said Treasury has no choice but to revise the budget downwards significantly and reduce expenditure to some areas if the development partners support will be inadequate.
He noted that the country’s economic growth agenda may not be on course because of the pandemic; hence, Mlusu was right to bank on development partners support because economic activity is just too slow to get enough funding to fight off the Covid-19 pandemic.
The World Bank 12th edition of Malawi Economic Monitor revealed that in percentage terms, domestic revenue—which comprises tax and non-tax revenue—totalled 4.1 percent of gross domestic product (GDP) for the first quarter, below the target of 4.7 percent of GDP.