Treasury posts k54.5bn deficit in November

Treasury has recorded a K54.5 billion deficit in November, despite posting a 3.5 percent revenue increase.

Available figures from the Reserve Bank of Malawi (RBM) indicate that in the five-month period to November 2018, Treasury has posted three deficits and two surpluses.

At the start of this financial year in July, Treasury posted a K13.5 billion surplus, a turn-around from deficits since January 2017.

However, government posted a deficit in the preceding month of August at K45.5 billion, before returning to a surplus of K3.8 billion in September. In October and November however, government posted a K27.6 billion and K54.5 billion deficits, respectively.

In November for instance, total government revenues amounted to K92.7 billion against total expenditures of K147.2 billion.

“During the month of November 2018, total government revenues increased by 3.5 percent to K92.7 billion, after it declined by 22.2 percent in the previous month. In November 2017, total government revenues declined by 1.9 percent to K80.1 billion.

“Total government expenditures in the month of November 2018 increased by 25.6 percent to K147.2 billion. This followed another increase in expenditures of 5.6 percent recorded in October 2018,” reads the RBM November 2018 Monthly Economic Report.

In November last year, Minister of Finance, Economic Planning and Development Goodall Gondwe says the 2018/19 financial year deficit could worsen if the World Bank fails to commit its K60 billion budget support.

Said Gondwe: “We have had a problem in as far as fiscal situation is concerned. We were hoping the World Bank would give us support, but they are changing their minds and we are hoping they change back. This means that we have lost about K60 billion.

“To us, this represent lost resources. That is why this year, we might have a larger deficit than anticipated.”

Treasury had earlier revised downwards the overall fiscal deficit for the 2018/19 financial year to 3.8 percent from 4.5 percent of gross domestic product (GDP), a move analysts argued was insignificant to trigger intended results.

The revision of the fiscal deficit—the difference between total revenue and expenditure—followed a K50 billion cut from K1.5 trillion total expenditure and net lending in the proposed 2018/19 budget to K1.454 trillion.

While a reduced fiscal deficit means a cut in future spending, a potential reduction in public debt and reduced cost of debt interest payments and less crowding out on private sector and fiscal tightening, it could cause lower economic growth.

Earlier, Parliament’s Budget and Finance Committee chairperson Rhino Chiphiko faulted Treasury for its ambitious assumptions, which he said has in many cases not materialised. n