Gwengwe’s bizarre budget

…Chiefs gets 100% increment..…Civil Servants pocket K10,000 increment..…no budget to mitigate high cost of li


Sosten Gwengwe, the Finance Minister on Thursday presented a budget that did make sense and contradicted himself, as he preached recovery without putting any measures to grow the economy.

In a classical Tonse Alliance promises and lies approach, the Minister projected economic growth to hit 2.8 percent but has not put measures to boost investment, with development budget pegged at K896.21 billion only.

The Minister expects his consumption budget of K3.87 trillion will have K600.93 billion from donors to fund development programmes and only K295.5 billion from local resources. This means K2.98 trillion of the budget are recurrent expenditures.

Gwengwe’s budget has a K1.01 trillion hole, which again he expects to borrow from the banks and foreign agencies, making it difficult to validate if anything will come from this budget as IMF cautioned already that Malawi can no longer absorb debt.

His borrowing will make up one third of the budget and his expenses are up by almost the same borrowing at 34.5 percent.

In a bizarre move, the Minister of Finance has decided to double honorarium for Chiefs while only offering only 8 percent increment across board for Civil Servants. The average civil servant will walk home with K10,000 against food inflation pegged at 31 percent and inflation around 21 percent.

The budget does not have any new measures to mitigate the cost of living nor anything on managing the projected 3.8 million people that will need food aid in the coming months.

“The increase in deficit was mainly on account of higher than planned salary adjustment, Public Debt Interest, Pensions and Gratuities, and other critical expenditure needs. The deficit is being financed through domestic and foreign borrowing at K745.79 billion and K261.11billion, respectively,” said Gwengwe.

There are no new Pay as You Earn (PAYE) tax measures save for the removal of 40 percent tax bracket for those who earn above K6 million. This means those earning K3 million above will now be taxed at 35 percent.“Total revenue and grants for the 2023/2024 fiscal year are estimated at K2.55 trillion representing 16.8 percent of GDP. Domestic revenue is estimated at K2.24 trillion representing 14.7 percent of GDP. Of the domestic revenue, tax revenue is estimated at K2.13 trillion while Other revenue is estimated at K114.34 billion,” said Gwengwe, who did not explain who will be paying taxes as companies slow down in production due to lack of electricity.

The Minister has allocated K140 billion to the fertiliser subsidy programme but has not made clear provisions on procurement of maize as the country is facing food crisis due to messing up of the subsidy programme and natural disasters.

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