2020/21 budget revised upwards by 6.4%
The 2020/2021 budget has been revised upwards by 6.4 percentage from the approved K2.19 trillion to K2.33 trillion.
Giving a Mid-Year Review Budget report in Parliament on Friday, Minister of Finance Felix Mlusu said the upward revision is due to over expenditure in Covid-19 management and re-administration of Malawi School Certificate of Education (MSCE).
Mlusu said these two accounts forced government’s expenditure in the first half of the fiscal year to exceed its target of K974.6 billion by 2.5 percent.
“This is on account of an increase in the unforeseen budget line of about K23.2 billion, of which K17.5 billion is towards Covid-19 pandemic management and treatment efforts and K4.5 billion is programed for re-administration of the Malawi School Certificate of Education Examinations,” Mlusu told members of the 1 Assembly.
Mlusu also told the August House that the revision was based on major assumptions of projected GDP growth rate of 0.9 percent in 2020 and 3.5 percent in 2021, an average inflation rate of 8.0 percent during the fiscal year, and a Policy rate of 12.0 percent.
In the first half of the fiscal year, Mlusu said government managed to collect K548.7 billion tax revenue from a projected K568.7 billion, representing 96.5 percent. The minister also said government is expected to save about K400 million from pension during second half of the financial year as it did in the first half following the failure by some people to show up for head count.
“The same is expected to be realized during the second half as no major changes are anticipated to the deleted list. The saved amount is being used to clear the backlog of pension payments in order to reduce the waiting time,” said Mlusu.
Mlusu also said the Tonse Alliance led government is working on a policy on free electricity and water connections which is expected to be implemented during the 2021/2022 fiscal year.
On building of 10,000 houses for security institutions, Mlusu said K4.6 billion was released to the Ministry of Lands to start construction of these houses, and currently 231 houses are under construction in different sites across the country.
The Minister of Finance said strong performance in agriculture curtsey of Affordable Input Program (AIP) will bolster the country’s economy in the year 2021.