Democratic Progressive Party (DPP) Member of Parliament for Blantyre South Noel Lipipa, has labelled the 2024/2025 Malawi national budget as unrealistic and unachievable.
On February 23rd, 2024 Malawi Finance Minister Simplex Chithyola presented the 2024/25 National Budget which has been pegged at 5.98 trillion Kwacha (32% of GDP) in expenditures against MK4.5 trillion (25% of GDP) in revenue and grants, translating to MK1.4 trillion in budget deficit (7.6% of GDP).
However, making his response to the budget on Tuesday 19th March, 2024, Lipipa underlined that the assumption of government is that Malawi Revenue Authority (MRA) will be able to meet its revenue collection target to finance the budget yet the tax collecting body will not achieve that because the economy is in deep suffocation.
“The 2024/25 budget, estimates that MRA will collect K3.3 trillion. While we applaud our revenue collectors, we must not be ignorant that they failed to collect the K2.2 trillion in 2023/24 budget deeming K3.3 trillion collection not only as an assumption but unrealistic,” said Lipipa.
The lawmaker further noted that MRA won’t achieve this target because the private sector is struggling due to high interest rates and forex shortage.
“Private sector can only borrow if there are favourable incentives such as, lower interest rates and or if an import substitute are introduced. Which enterprise will attempt borrowing in our current economic quagmire?
“Commercial banks are for short term lending. When MRA definitely fails to collect the 3.3 trillion we will end up with several situations for example the, development budget will be choked since developments like roads are long-term in nature and therefore this budget will not be able to finance such with short term borrowing. We will end up with delayed salaries, we will end up with budget cuts in ORT exactly like what is happening with the 2023/2024 budget,” he noted.
He then went on to say the imbalances in the budget, will exert pressure on the much-needed revenue collection.
“The non-tax wage bracket has been increased to K150,000, which is much appreciated, however, that move wipes about 20BN from revenue collection.
“The increase of CDF to 200m is a good reflection on actual reality but then it means an additional 19.3BN on the budget, while AIP budget has remained at K160 billion,” he noted.
Lipipa challenged the finance minister that there are serious challenges that needs to be addressed such as domestic revenue which is not growing, rising pension bill and struggle to pay salaries.
He then proposed solutions such as limiting domestic borrowing, cut domestic travel expenditure and careful management of the forex through taking measures such as import substitution, increasing exports and boosting tourism.
