Finance Minister Chithyola Banda revises budget to MK4.33 trillion; Focuses on economic recovery

* The mid-year review indicates a positive revision in total revenues and grants, increasing from MK2.55 trillion to MK3.05 trillion

* Simultaneously, total expenditure saw an upward adjustment from MK3.79 trillion to MK4.33 trillion

By Laison Kamkole

In a comprehensive presentation today in Parliament, Minister of Finance & Economic Affairs, Simplex Chithyola Banda outlined the 2023-24 mid-year revised budget framework, revealing significant adjustments to both revenues and expenditures.

The Minister made the presentation under the title ‘Time for Reflection to Recover, Develop, and Protect our Economy’ — emphasizing the need for collective action to address emerging fiscal challenges.

The mid-year review indicates a positive revision in total revenues and grants, increasing from MK2.55 trillion to MK3.05 trillion. Simultaneously, total expenditure saw an upward adjustment from MK3.79 trillion to MK4.33 trillion.

Chintyola Banda attributed these changes to budget performance during the first half of the fiscal year and anticipated projections for the second half.

“Government will continue enhancing the system in financial reporting, bank reconciliation, recording of Government commitments and payment efficiency through a stable Electronic Funds Transfer (EFT) platform.

“Furthermore, through the department of Accountant General, the Government will continue rolling out additional system functionalities such as contract management, revenue management, asset management and project systems,” he said.

Highlighting the projections for the second half of the 2023/24 financial year, the Minister noted that total revenue and grants are expected to reach K1.60 trillion, which includes MK1.23 trillion from domestic revenue and MK372.54 billion from grants.

The projected total expenditure for the same period is MK2.31 trillion, with recurrent expenditure at MK1.79 trillion and development expenditure at MK513.41 billion.

Breaking down the recurrent expenditure, wages and salaries account for MK543.61 billion, interest payments for MK561.19 billion, goods and services for MK291.91 billion, grants (transfers) for MK178.22 billion, and social benefits for MK156.81 billion.

Development expenditure is projected at MK513.41 billion, comprising MK353.24 billion for foreign-financed expenditures (Part I) and MK160.17 billion for locally financed expenditures.

Despite the positive revenue outlook, the Minister acknowledged a projected deficit of K709.13 billion for the second half of the fiscal year and to address this, the government plans to borrow from both foreign and domestic markets.

During the mid-year, total revenue and grants amounted to MK1.45 trillion, surpassing the midyear projection of MK1.25 trillion while domestic revenues were estimated at MK1.18 trillion, with tax revenue accounting for MK1.03 trillion and non-tax revenue at MK151.8 billion.

Total grants disbursed in the first half reached MK273.40 billion, prompting an upward revision of projected grants for the fiscal year to MK645.94 billion.

On the expenditure side, rising inflation and significant debt maturities during the first half led to total expenditure of MK2.02 trillion, with recurrent expenditure at MK1.45 trillion and development expenditure at MK567.24 billion.

Recurrent expenditure saw an underperformance of MK122.99 billion, mainly due to reduced spending on goods and services and social benefits.

Development spending during the first half amounted to MK567.24 billion, with foreign-financed projects overperforming by 50.6% and domestically financed projects by 4.6%.

The overall balance (deficit) in the first half was MK569.79 billion against a projected MK737.82 billion.

Chithyola Banda acknowledged the impact of currency adjustments on the budget and urged prompt adoption of the proposed budget review to support Malawians.

He outlined measures by the Reserve Bank of Malawi to counter the effects of the exchange rate correction, emphasizing a tight monetary policy and vigilant inflation monitoring.