We saw this coming

Let’s start with public hospitals. Ambulances are grounded. Patients can no longer access meals, or at least the three meals they are supposed to be getting.

At best, some get a meal a day and at worst there is no food for patients, yet they need nourishment as part of their treatment.

Most public hospitals do not have enough drugs and patients—mostly rural-based poor people—are given prescriptions and advised to get the medicine from private pharmacies.

Mortuaries are breaking down and funding has been cut to as much as a third of the budgets. Some go for at least a month without Treasury funding. Life is terrible in public hospitals.

Across the public service, salaries are rarely on time. As we speak, most employees at government ministries, departments and agencies are yet to get their salaries and no one knows when they will be paid.

Of course, the personal emoluments budget is bloated and should never have been allowed to rise this much, but government signed onto it and, therefore, has the responsibility to pay.

Public sector investment has taken a severe beating as Capital Hill is too broke to worry about infrastructure spending, which helps drive the economy and results in better development outcomes.

The private sector is reeling under high inflation and interest rates as well as a Malawi kwacha that has become everybody’s punching bag.

Meanwhile, businesses’ hundreds of billions in operating capital are stuck with government in form of arrears, which it is failing to settle. The real sector can’t breathe anymore.

I do not have statistics, but my educated guess is that consumption has dropped considerably as purchasing power shrinks.

That, combined with low production capacity across industries and sharp declines in government spending, is weighing down the economy to a level that has, not surprisingly, the Malawi Revenue Authority (MRA) under collecting taxes.

In the five months of the first half of the 2015/16 financial year, MRA has missed its revenue collecting target by K7.05 billion.

In a performance report published this week, MRA said it collected K53.03 billion in October 2015 against a target of K55.97, missing its mark by five percent.

It is telling that one of the major losses were recorded in corporate tax, suggesting that businesses are suffering and those struggles are coursing through the economy.

The country is in trouble, worsened by the withdrawal of the 40 percent financing that donors traditionally pump into our budget as direct aid.

But we saw this MRA crisis much earlier—the moment the budget was tabled, it was clear that serious suffering lay ahead on account of a busted revenue source not just in real terms, but also at current prices, which is a catastrophe.

We put these problems in stark terms. This is how the opening paragraphs of the first Weekend Nation analysis of the national budget put it:

Poor Malawians should be afraid—very afraid. Their livelihoods—which mostly depend on government welfare—could face a severe knock as Capital Hill’s financing power diminishes.

Even businesses—which count on government as its largest client—should brace for huge potential earnings losses because both public investment and consumption—probably the country’s most important economic activity that expands business opportunities and creates jobs—is set for a sharp scale-back in the 2015/16 financial year.

That is because the roughly K902 billion 2015/16 National Budget that Finance, Economic Planning and Development Minister Goodall Gondwe tabled in Parliament yesterday, shows that revenue, in real terms, is falling fast—leaving little fiscal space.

Let us start with total revenue and grants. At a projected K763.5 billion in 2015/16, these resources are just over 11 percent more than 2014/15’s revised estimate of K683.3 billion. But that is at current prices.

As a ratio of gross domestic product (GDP) the 2015/16 projection is 22.2 percent of the economy, lower than the 24.2 percent of GDP that the K683.3 billion revenue represented in 2014/16.

That means government will collect less money at constant prices this year than last year which, as Gondwe admits, will make it harder for government to serve its people better.

That service includes potable water, health, education, road network and other social activities that only government can provide at the poor.

That was in May. And now…