The 2020/2021 National budget has been revised upwards from K2.190 trillion to K2.334 trillion, with Finance Minister Felix Mlusu mentioning Covid-19, re-administration of exams and election case legal costs as factors for the increase.
Mlusu today presented the 2020/2021 Mid-Year Budget Review Statement. He said total revenues and grants have been revised upwards from K1.435 trillion to K1.523 trillion
The Minister said they took into account various assumptions and had hoped that the budget will be K2.190 trillion but it has increased considering the demands and the Covid-19 pandemic response needs which government had to take care of.
Mlusu noted that his ministry has already released K17.5 billion for Covid-19, spent K4.5 billion on the re-administered Malawi School Certificate of Education (MSCE) exams, and also paid elections case legal costs of about K7.5 billion.
“All these demands were not in our budget, these are the ones that have affected our need to revise the budget to what it was which was 2.190 Trillion to now 2.334 Trillion Kwacha,” he said.
The deficit for the 2020/2021 fiscal year has also been revised upwards from K755.1 billion to K810.7 billion, or 8.8 percent of GDP. Mlusu in his presentation said the deficit is expected to be covered through foreign financing of K246.3 billion, with the balance of K564.4 billion programed to be financed through domestic borrowing.
In the first half of the year, Government had planned to spend K974.6 billion but as at end December 2020, expenditure outturn was recorded at K998.5 billion consisting of K830.1 billion in recurrent expenditure and K168.4 billion in development expenditure.
“Total expenditure at mid-year surpassed its target by K23.9 billion, largely emanating from the development budget line as recurrent expenditure fell short of its target by K62.5 billion,” said Mlusu
Commenting on the budget, Former Minister of Finance Joseph Mwanamvekha said that the budget is flat and off- track considering that issues like revenues were not achieved and that there is over-expenditure which means that what was planned was not achieved.
Mwanamvekha who is also Legislator for Chiradzulu South added that the deficit has increased and there is very little on development projects.
He also expressed concern that government has not increased the budget for maize purchase.
“This year as predicted we are told that there will be a lot of Maize. It means the farms will not get good prices as they were promised. You may recall that government through Tonse Alliance promised that farmers will be getting good prices for their commodities such as Maize and legumes but looking at the budget it means that farmers should not expect good prices for their commodities,” he said.