Minister of Finance, Economic Planning and Development, Goodall Gondwe, has said the proposed 2018/19 budget, which was initially pegged at K1.504 trillion, has been reduced to K1.403 trillion.
Gondwe said the reduction has been made as a response to concerns that a large budgetary deficit could result in a heavy burden in terms of domestic debt, which has a huge bill at the moment.
“We propose to reduce the total expenditure and net lending (in other words the budget) from K1.504 trillion to K1.453 trillion. This entails a reduction of the deficit inclusive grants or the overall balance by about K50.0 billion to 3.8 percent of GDP [Gross Domestic Product] instead of an earlier budgetary deficit of 4.5 percent of GDP inclusive grants,” Gondwe said.
He was speaking in Parliament Monday in his winding-up statement to the debate on the national budget, before Members of Parliament (MPs) started scrutinising specific allocations to government ministries, departments and agencies.
Gondwe said, although there were concerns on such government initiatives as Farm Input Subsidy Programme (Fisp) and the Decent and Affordable Housing Programme, popularly known as Malata and Cement Subsidy Programme, the government would continue implementing the programmes.
The minister said the government is of the view that Fisp should continue, as the programme has reduced cases of food shortage in the country.
He said unless smallholder farmers find alternatives to fertiliser subsidy, the scrapping of the programme could bring about food shortages to the country.
“There was very sharp criticism against Malata and Cement Subsidy Programme by the opposition again, who assert that it is a waste of resources. However, Mr Speaker Sir, it is ironical that, when it is proposed that the programme should cease to be implemented in their constituencies, there is an outcry against such a proposal by the constituents themselves.”
In his statement, which he delivered for close to an hour, Gondwe also told the august House that he is not delaying the Salima-Lilongwe-Water project, as stated by Malawi Congress Party spokesperson on finance, Alexander Kusamba Dzonzi.
He said the government is only following procedures of funding the project.
He said Malawi, as a beneficiary of International Development Association concessional resources, can only borrow or guarantee funds on concessional terms.
“It is for this reason, therefore, that we are taking time to ensure that we do a proper financial due diligence including seeking the necessary waivers from the International Monetary Fund (IMF) to proceed with the proposed financing option for this project,” he said.
He added: “The contractor is aware of what government is doing on this project.”