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Saturday, 23 May 2015 18:40

Gondwe unveils MK901.6 billion 2015/2016 Budget

Written by  Kondwani magombo

Gondwe delivers the 2015/16 budget statement - Pic by Stanley Makuti

Lilongwe, May 23: Malawi Finance Minister, Dr Goodall Gondwe, Friday unveiled the 2015/2016 National Budget pegged at MK901,6 billion with key allocations of MK133.7 billion to agriculture, MK109.8 billion to education, and MK77.4 billion to health sectors.  

Gondwe said although the figure appeared to be higher in money terms than the 2014/15 financial year revised total expenditure of MK800.7 billion, it was actually lower in real terms.

He said the 2015/16 budget constituted 26.2 percent of GDP, while the revised budget for Financial Year 2014/15 accounted for 28.4 percent of GDP.

The minister said in 2015/16 Financial Year, the recurrent budget would be at MK674.6 billion while the development budget would amount to K224.0 billion.

“In particular, total revenue and grants are projected at MK763.5 billion in Financial Year 2015/16. This is 22.2 percent of GDP, hence a lower share of GDP than the revised figure for Financial Year 2014/15 of MK683.3 billion, which represented 24.2 percent of GDP,” explained Dr Gondwe.

He said the decline in total revenue and grants as a share of GDP was entirely due to the continued decrease in donor grants, which amounted to MK132.8 billion in Financial Year 2014/15, but were projected to decline to MK97.1 billion in Financial Year 2015/16.

Gondwe projected tax revenues to rise from MK581.0 billion in Financial Year 2014/15 to MK592.4 billion, as the Malawi Revenue Authority (MRA) set out to strengthen the tax administration regime, and as the economy bounced back from subdued growth.

He said with the exception of the Agriculture vote whose allocation had declined as a result of some rationalisation of the proposed expenditure under FISP, the rest of the key votes allocations represented increases relative to the revised expenditures for Financial Year 2014/15.

The three key features of the 2015/16 budget are that there will be no budgetary support; there will be lower revenues and grants due to a decrease in donor grants; and there will be an increase in tax and non-tax revenues from MK581.0 billion in 2014/15 Financial Year, to K592.4 billion in 2015/16 Financial Year due to mainly enhanced tax administration, according to Gondwe.

But the Minister said although the donor community had stopped supporting the country's budget, they were giving off-budget support to some sectors which was complementing the national cake.

Explained Gondwe: “Although direct donor contribution to the budget is declining, off-budget donor support has been rising in money terms.

“For example, it will be noted that the Ministry of Health has a budgetary allocation of MK77.4 billion in the coming Financial Year 2015/16 budget, but it will also receive off-budget donor resources worth about MK55.6 billion, making a total ofMK123.0 billion available to that ministry during the year.”

Gondwe also disclosed that the Ministry of Gender had a total budgetary allocation of MK3.2 billion, and would receive off-budget donor funding amounting to MK14.4 billion almost 5 times the amount in the budget.

He added that some MK424.3 billion or about 47 percent of the proposed total expenditure and net lending amount of MK901.6 billion constitutes statutory expenditures.

“These are expenditures which the Government is legally prohibited from postponing each year, and are mostly dominated by Presidential emoluments, Pensions and debt servicing costs,” explained Gondwe.

He added: “Therefore, there is very limited room for meeting our ORT needs this year; this is a very important factor that should be considered in analyzing the proposed budget.”

Meanwhile, donors have reacted to Gondwe's budget statement, with the World Bank's Country Manager, Laura Kullenberg, commending Government for stressing on fiscal discipline and reduced borrowing while British High Commissioner to Malawi, Michael Nevin, said all that mattered was implementation.


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