AACC Economic Justice & Accountability Ambassador in Malawi, Rev. Baxton Maulidi advises Government to devise ways to cut down on expenditure as it is contributing to the challenges in managing the economy

* It is disheartening that the much-touted austerity measures on expenditure that the government announced last year seem not to be applied*

* If the austerity measures were applied to the book, I believe we shouldn’t be hearing of the escalation of expenditure as reported by the media unless the budget projections figures were under estimated

By Duncan Mlanjira

Following revelations in the media of escalation of expenditure by Malawi Government and the budget deficit of MK769.2 billion in the eight months since it was approved in February 2024, All-African Conference of Churches (AACC) Economic Justice and Accountability Champion & Ambassador in Malawi, Rev. Baxton Maulidi is advising Government to devise to walk the talk & being Practical by cutting down on expenditure as it is contributing to the challenges in managing the economy, and think of some investments to generate forex and minimise imports.

Rev. Maulidi, who is also Church of Central Africa Presbyterian (CCAP) Blantyre Synod Deputy General Secretary, emphasises that it is also the duty of faith community to scrutinise the affairs of the country as it affects the welfare of its members across the country.

He thus said after reading reports of Malawi’s economic trends in the media, “it was disheartening that the much-touted austerity measures on expenditure that the government announced last year seem not to be applied”.

“If the austerity measures were applied to the book, I believe we shouldn’t be hearing of the escalation of expenditure as reported by the media unless the budget projections figures were under estimated.

“The authorities should go back to the drawing board to assess where they are not doing right. Think about the most vulnerable child in the village, they are feeling the pinch of the economic challenges being faced.

“The current fuel situation is one good example that somehow, the system is not working because if you remember very well, the authorities challenged that Government had a long-term solution to fuel supply and that its scarcity would be history.

“But the same situation is back in worrisome magnitude and cause of concern by the public despite the assurance by the Minister of Information, National Oil Company of Malawi (NOCMA) and Malawi Energy Regulatory Authority (MERA) that the government is doing everything possible to normalise the situation.

“What the public expected is an assurance that this challenge will be solved permanently by indicating the measures that have been put in place,” Rev. Maulidi said.

At a press briefing yesterday, Information Minister — alongside chief executive officers of MERA, Henry Kachaje and NOCMA, Clement Kanyama — assured that the government is working tirelessly to ensure that fuel supply is stabilised by the weekend is available.

He added that they understand the difficulties which Malawians are facing due to fuel shortage and how it has affected many lives.

He disclosed that the shortage of fuel has come due to accumulated debts owed to fuel suppliers and shortage of forex and to normalise the situation, the government is borrowing money from the Arab Bank for Economic Development in Africa (BADEA) to buy more fuel.

He further said the government has allocated US$21.5 million to fuel importers as a way of lessening the burden and that 44 tankers are already in the country and additional fuel supplies are on the way, including 29 trucks carrying 1.1 million litres of petrol, 30 wagons transporting 1.2 million litres of petrol, 150 trucks delivering 5.7 million litres of petrol and nine trucks carrying 350,000 litres of diesel to restore the country’s fuel supply.

On his part, NOCMA CEO Kanyama said the country continues to receive a constant supply of fuel and that the current fuel shortage will be rectified soon and assured Malawians of NOCMAs commitment and unwavering dedication to ensure the availability of fuel in the country.

However, Rev. Maulidi observed that the measures that were announced at the press briefing seem to target solving the current fuel situation and he advises the government to come up with long-term solutions.

“We can’t afford to be taking one step forward and two steps backwards; we can’t move forward that way. We need the austerity measures to be applied because these are some of the things leading towards the economic challenges we are facing,” he said.

In a statement issued yesterday, which was copied to Information Ministers Kunkuyu and Economic Affairs Simplex Chithyola Banda, Alliance for Democracy (AFORD) national director for economic affairs, Chifipa Mhango, observed that Government “is facing fiscal consolidation challenges in managing the economy, with import cover, a key forex position indicator also reaching very stressful levels, at 0.5 months or 15 days import cover, among the lowest in years”.

Mhango, who is Chief Economist for Don Consultancy Group (DCG), quotes latest data gathered from the Reserve Bank of Malawi (RBM) and in his, he observed that “the picture shows a widening budget deficit, meaning a growing government expenditure compared to revenue and massive accumulation of government debt, at over 80% share of the country’s GDP”.

“Government total expenditure has escalated from MK1.8 trillion in 2020 to reaching a record of MK3.3 trillion in 2023. In the first eight months of 2024 to August, government expenditure is already at MK3.6 trillion, which is way above the full total of 2023.”

Of more concern, as observed by Mhango, is the recurrent expenditure of MK2.7 trillion in this first eight months of 2024, representing a 75.1% share of expenditure towards administrative costs and only 24% on development projects.

He further said “much as the government total revenue increased from MK1.3 trillion in 2020 to MK2.9 trillion, due to some tax increase, thus bringing budget deficit level slightly down by MK100.2 billion to reaching MK402.2 billion in 2023, the first eight months of 2024 to August are showing some worrisome signs”.

“Government budget deficit in these first eight months of 2024 has already surpassed the total of 2023, reaching MK769.2 billion — a clear indication of fiscal pressures, and non-adherence to austerity approach in spending.”

He thus alerted Malawians to “brace themselves for tough times ahead, if the current situation does not improve”, adding that “the economy is failing to attract the much-needed investment”.

From Mhango’s analysis, Rev. Maulidi says this calls for soul searching by the authorities, stressing that the government should cut down on unnecessary expenditure as campaigned for when the austerity measures were put announced by the President himself.