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Malawi to overspend by K68 billion

Malawi Finance Minister Dr. Ken Lipenga on Friday delivered a 27-page 2012/13 mid-year budget statement whose major highlight was the bloating of total expenditure and net lending by K68 billion (about $188.9 million).

This means the 2012/13 approved budget estimate, which was pegged at K408 billion (about $1.13 billion), has swelled to K475.8 billion (about $1.32 billion) during the fiscal year, representing a 16 percent rise.

The minister, who described the implementation of the budget in the first half as “successful”, attributed the upward revision in the budget to pressure on some key expenditure lines during the first half of the financial year on account of the depreciation of the kwacha, which he said “was passed through into higher prices”.

“These included procurement of drugs and medical supplies; purchases of teaching and learning materials; payment for subscription to international organisations; operations of foreign missions abroad and resources for implementing the Farm Input Subsidy Programme (Fisp),” said Lipenga.

Lipenga said recurrent expenditures are expected to increase from the original estimate of K332.2 billion (about $922.8 million) to K381.3 billion (about $1.06 billion) while development expenditures are expected to jump to K94.5 billion (about $262.5 million) from K76.2 billion (about $211.7 million).

But the minister admitted that total grants have underperformed by K5.6 billion (about $15.6 million) on account of lower receipts from dedicated grants to the National Aids Commission (NAC) and the education sector support as well as projects grants.

Government had earlier projected to receive K109.6 billion (about $304.4 million) in grants against the actual receipts of K104 billion (about $288.9 million) in the first half of the fiscal year.

Lipenga also said domestic revenues—which comprise tax and non-tax revenues—have been revised upwards to K278.9 billion (about $774.7 million) from K270.4 billion (about $751.1 million) approved in the budget.

The minister also outlined key achievements in the first half of the fiscal year which include timely distribution of fertiliser under Fisp, delivery of maize to the strategic grain reserves and securing of funds from donors to replenish the reserves and the completion of various road projects across the country, among others.

Reacting to the statement, Democratic Progressive Party (DPP) Leader in the House George Chaponda was quick to fault government for painting a rosy picture on the budget implementation in the first half of the financial year.

“The first impression [to the mid-term budget statement] is that major issues did not come out. For instance, we did not hear how government will deal with high inflation rate and high interest rate now at 40 percent,” said Chaponda.

Chaponda’s reaction was echoed by Leader of Opposition in the House John Tembo who said the statement lacked specifics and doubted the over-performance of key fiscal targets “until Parliament verifies vote by vote in the coming days”.

But Norwergian Ambassador Asbjørn Eidhammer, who also witnessed the presentation, said he was impressed by the budget performance in the first half and hoped that the economy will rebound in the course of implementing economic reforms by the Joyce Banda administration.

Malawi Health Equity Network executive director Martha Kwataine said outside Parliament that she hopes the budget review will come up with strategies that will show that Malawi is serious about addressing its own problems ‘and not just relying on donors’.

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