Minister of Finance Simplex Chinthyola Banda has indicated that the austerity measures recently announced by President Lazarus McCarthy Chakwera are expected to save almost MK4.2 billion during the implementation of the national budget.
The Minister was speaking in Parliament on Monday when he presented 2023/24 revised national budget and mid-year review.
President Chakwera’s austerity measures include suspension of foreign trips as well as slashing of benefits for ministers and other senior government officials.
Chithyola Banda says the money saved will be rechanelled towards productive sectors of the economy such as the mega farms programmes which is one of the flagship campaign promises by President Chakwera administration.
The Minister of Finance also said that the IMF’s approval of the Extended Credit Facility (ECF) for Malawi will unlock more than 240 million dollars (almost MK404 billion).
The new ECF in itself is worth about 174 million dollars and is expected to bolster the country’s Balance of Payments (BoP)- a record of transactions between Malawi and the rest of the world.
Further, the Finance Minister announces a flurry of more expected inflows to be injected into the economy on the back of the new IMF programme.
The resources are a first of its kind to be disbursed to President Lazarus McCarthy Chakwera administration since the plunder of resources that occurred in 2013, popularly christened cashgate.
For instance, Chithyola Banda says Malawi will receive 80 million dollars direct budget support from World Bank-which is currently ranked the country’s largest multilateral creditor through its development arm, the International Development Association (IDA).
The country is also set to get 30 million dollars from the African Development Bank (AfDB) as well as 60 million euros from the European Union (EU).
As a cushion, Chithyola Banda says the provision of wages and salaries has been revised upwards by K80 billion from its approved K900 billion, stressing that such a provision is meant to cushion civil servants from the recent Kwacha realignment which saw the local currency being devalued by 44 percent.
The Minister of Finance also said government has set aside K12 billion for maize purchase, and this will be supplemented by the World Bank’s K34 billion for the same cause, to ensure no one is starving.