Following presentation of the 2018/19 budget statement by the Minister of Finance,Economic Planning and Development on 18th May 2018, Economics Association of Malawi (ECAMA) organised the Budget Analysis workshop on 28th May 2018 at Sunbird Lilongwe Hotel, in Lilongwe. The main objective of the workshop was to provide a forum for economists, private sector and all interested parties to publicly analyse the budget with the aim of isolating the key takeaways from the proposed budget. In the end participants were expected to make objective and informed opinion on the opportunities and risks embedded in the proposed budget.
The main presentation was done by Mr. Maleka Thula, Executive Director of ECAMA. Overall, the proposed budget is estimated at K1,504 billion (28.2 % GDP) against estimated revenue and grants of K1,261 billion (23.6 %GDP) --this is projected to result into a budget deficit of K242 billion (4.5 %GDP). Subsequently, government domestic borrowing is projected at K176 billion (3.8 %GDP) and projected to increase to K235.1 billion in 2019/20. At the current debt stock of K1.3 trillion (26.0%GDP), Malawi is above the minimum domestic debt ratio of 20.0 percent of GDP,hence continued borrowing is a worrisome development. It was therefore observed that increased government domestic borrowing is more likely going to lead to increase in interest rates and crowd out private sector investment.
The panel comprised of Dr. Kisu Simwaka, Director of Economic Policy Research at the Reserve Bank of Malawi, Dr. Hannock Kumwenda, Former Director in the Ministry of Finance, Economic Planning and Development and Independent Consultant, Mr.Chancellor Kafererapanjira, Chief Executive Officer, Malawi Confederation of Chambers of Commerce and Industry (MCCCI) and Mr. Karl Chokhoto, Former President, MCCCI.
Overall,it was agreed that while economic environment is favourable for growth, several risks remain in the implementation of the budget and growth prospects.Participants noted that electricity power shortages, huge government borrowing,corruption and weather shocks to agricultural sector remain major risks in implementation of 2018/19 budget. Besides, members noted that private sector has been ignored in the proposed budget and this will also have a bearing on the economy.