Treasury in k64 billion q1 deficit
Ministry of Finance has closed the first quarter of the 2020/21 financial year with a deficit of K64.7 billion, recently published Reserve Bank of Malawi (RBM) figures have shown.
During the review period, government collected K253.4 billion in tax revenues and spent K50.1 billion on interest payments.
On average, tax revenues collected amounted to K84.5 billion per month.
MRA commissioner general John Biziwick told Business News that during the 2020/21 fiscal year first quarter (July to September), revenue collection was not good due to reduced imports and low domestic revenue mobilisation axacerbated by the Covid-19 pandemic.
He, however, said the situation is now improving, with October revenues alone beating its target by K4 billion.
He said: “We are hoping that we should have increased imports which will ensure that we are collecting more as you are aware, Covid-19 affected local companies as some of them closed and we were not able to collect all taxes.”
Biziwick, however, said the commission is yet to come up with exact measures for widening the tax base to the informal sector, having discussed the same with the minister.
Treasury figures indicate that revenue collection figures due to the impact of Covid-19 pandemic are narrowing to K5 billion from K12 billion per month from pre-Covid-19, when cases were rising and the post-Covid-19 pandemic when cases are now declining.
However, between January to July this year, revenues dropped by 11 percent which affected anticipated revenue collection in the 2019/10 fiscal year.
However, Treasury wants MRA to be collecting an average of between K120 billion to K150 billion, from the current K90 billion because of the increasing demand of the budget.
Finance Minister Felix Mlusu told Business News that there are a lot of areas where businesses and institutions are not being taxed because we do not have the means and systems for us to reach out there, but we are encouraging MRA to come up with innovations so that we can reach out.
“A large part of the informal sector is not within the tax band, we are coming up with initiatives to empower the informal sector so that they can improve their businesses and contribute to the national revenue collection of government.”
In the 2020/21 Financial Year, Treasury projects domestic revenues at K1.179 trillion or 16.5 percent of GDP with K1.116 trillion in tax revenue while K63.1 billion is other revenues.
Expenditure, on the other hand, is projected at K2.190 trillion or 30.6 percent of the country’s GDP and representing an increase of around 22.9 percent from the 2019/2020 preliminary expenditure outturn.
Treasury projects fiscal deficit at K754.8 billion, which will be financed by foreign borrowing amounting to K224.8 billion and K530.1 billion from domestic borrowing.
