* In order to achieve set targets for smooth budget implementation
* Second half has been drawn with full consideration of developments during the first half
* Total revenue and grants are projected at K875.8 billion
* Of which K621.6 billion is domestic revenue and K254.2 billion are grants
By Duncan Mlanjira
Finance Minister Felix Mlusu has told Parliament sitting in Lilongwe on Friday that in the second half of 2020/2021 fiscal year, Government will continue with its efforts to enhance domestic revenue collection in order to achieve set targets for smooth budget implementation.
And in this regard, the Malawi Revenue Authority (MRA) will continue implementing turnaround strategies aimed at achieving efficiency and enhanced tax payer compliance.
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Mlusu presented that during the second half, total revenue and grants are projected at K875.8 billion of which K621.6 billion is domestic revenue and K254.2 billion are grants.
“Total expenditure and net lending is projected at K1.336 trillion of which K888.1 billion is recurrent expenditure and K447.4 billion is development expenditure.
“Madam Speaker, of the K888.1 billion recurrent expenditures, K269.3 billion is for wages and salaries, K236.6 billion is for interest payment, K156.9 billion for goods and services and K122.4 billion for social benefits.
“Under development expenditure, a total of K447.4 billion is projected to be spent during the second half, comprising K395.7 billion foreign financed expenditures (Part I) and K51.6 billion locally financed (Part II).
Finance Minister Mlusu
He went further to say that the budget in the current fiscal year has been revised based on major assumptions — a projected GDP growth rate of 0.9% in 2020 and 3.5% in 2021; an average inflation rate of 8.0% during the fiscal year; and a Policy rate of 12.0%”
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“Total revenues and grants have been revised upwards from K1.435 trillion to K1.523 trillion, representing 16.5% of the country’s Gross Domestic Product. Total expenditure and net lending has also been revised upwards from K2.190 trillion to K2.334 trillion.”
He said there has been a slight upward revision in domestic revenues and are now projected at K1.186 trillion from K1.179 trillion in the approved budget. This is mainly on account of a positive adjustment in Other Revenue as Tax Revenues are projected to remain at K1.116 trillion.
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“Other Revenue (non-tax revenue) are projected to increase from K63.1 billion to K69.6 billion in the revised budget. This is on account of the expected increase in dividends and surpluses.
“Grants, Madam Speaker, are projected to increase from K255.7 billion to K337.5 billion by the end of the fiscal year. This is on account of the increase in resources from development partners which were approved during the course of the fiscal year and have now been included in the budget framework.
“Total expenditure has been revised upwards from K2.190 trillion to K2.334 trillion. Both recurrent expenses and development expenditure lines have been adjusted upwards to K1.718 trillion and K615.8 billion, respectively.
“Development expenditure has been increased from an approved provision of K511.2 billion to K615.8 billion, representing an increase of K104.7 billion. Of the K104.7 billion, foreign financed projects amount to K100.8 billion on account of projects which became effective during the course of the financial year.
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“Domestically financed project budget has also been increased from K100.9 billion to K104.7 billion on account of increased allocation to finance the new IFMIS project and also to develop detailed designs for the Judicial complex.”
On Overall Balance and Domestic Borrowing — on account of developments in both revenues and expenditures — total deficit for the 2020/2021 fiscal year has been revised upwards from K755.1 billion to K810.7 billion, or 8.8% of GDP.
“This deficit is expected to be covered through foreign financing of K246.3 billion, with the balance of K564.4 billion programed to be financed through domestic borrowing.”
