Malawi’s economy is in dire straits, but if current reforms are sustained, tight monetary policies are followed and fiscal governance improves, things could get better for the country.
That is what British High Commissioner to Malawi Michael Nevin believes.
But Parliamentary Committee on Budget and Finance Chair Rhino Chiphiko has taken a grim view in the wake of Finance, Economic Planning and Development Minister Goodall Gondwe’s revised budget.
Chiphiko said the dramatic changes to the budget that Gondwe announced show that the budget projections were unrealistic from the start.
Gondwe announced yesterday his mid-term budget review in Parliament with a downward revision of the budget by K23.7 billion cut.
The 2015/16 approved budget was initially pegged at K929.7 billion, but is now down to K906 billion with recurrent budget reduced by just over K17.1 billion and the development budget slashed by K5.6 billion.
However, Nevin, while acknowledging the announcement as sign of a difficult time, opted for optimism if the painful choices Treasury has made to tackle the economic challenges facing the country, are addressed.
Nevin, speaking to journalists immediately after the address, said the adjustments were not surprising bearing in mind the economic situation.
“Any political party would find it difficult in the current situation; I think the Minister has had to take some difficult decisions, but reducing the fiscal envelope is important as long as the priorities of what is left are being spent to protect social sectors and at the same time doing what can be done to stimulate economic growth,” said Nevin.
He welcomed the decrease in borrowing which, he said, will help reduce inflation that, he said, is “hurting everyone.”
“The Minister was in a difficult situation, he couldn’t predict the weather and clearly the weather had something to do with the outturn of the economy; the tax revenues are down and he has had to reduce the budget with the overall goal of reducing inflation.
“He needs to keep going, restraining expenditure, reforming agriculture, good governance reforms and keep making those difficult decisions,” said Nevin.
But chairperson of the Budget and Finance Committee of Parliament Rhino Chiphiko questioned the credibility of the initial budget figures, saying from the onset the opposition side in the House had raised doubts.
“We asked why are we were pushing the budget to K930 billion, [and] we were told the budget is always projected upwards, but at the end of the day, are these figures realistic or just working figures?’’ n