Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has expressed concern over government’s continued focus on recurrent spending at the expense of development expenditure, saying this has the potential to derail economic growth.

In its 2022/23 National Budget Assessment, MCCCI has, however, commended government for increasing development expenditure by 51.9 percent from K540 billion in 2021/2022 fiscal year to K820.67

 billion in the proposed 2022/23 Budget.

Development expenditure is key for projects such as this one

But the private sector lobby group argues that the increase in recurrent expenditure from K1.424 trillion in 2021/2022 fiscal year to K2.01 trillion in the proposed 2022/23 Budget still outweighs development expenditure

 Reads the assessment in part: “It was stated in the chamber’s pre-budget proposal that there is need for greater prioritisation for efficiency-driven fiscal policies with focus on budget lines which the government has consistently been overspending.

“It is still the chamber’s view that the government’s recurrent expenditure is high and this ought to be improved.”

MCCCI argues that efforts to channel more resources to the development budget should continue as this has positive spill-over effects on the growth, which could translate into improved domestic revenue.

In the 2022/23 National Budget Statement,

Minister of Finance and Economic Affairs Sosten Gwengwe indicated that total expenditure for the 2022/23 fiscal year is projected at K2.84 trillion, representing 24.9 percent of gross domestic product (GDP).

Of the total expenditure, recurrent expenses are estimated at K2.019 trillion, representing 17.7 percent of GDP and 71.1 percent of the total expenditure.

Gwengwe said the large increase in the development financing is largely in line with government’s recovery plan under the two-year K500 billion Covid-19 Social Economic Recovery Plan, which outlines the need for frontloading of project implementation.

World Bank figures show that Treasury only spent 0.5 percent of GDP against a fiscal year target of 2.8 percent in domestically financed development expenditure in the first quarter of this financial year.

According to the Bretton Woods institution, weak execution was also reported in a foreign financed component where only 0.3 percent of GDP has been spent in the first quarter against a budgeted fiscal year target of 4.4 percent of GDP.

Malawi’s public investment in infrastructure has been negligible, averaging 4.18 percent over a 20-year period from1998–2017, according to the World Bank.

At 4.18 percent, this is lower than in Mozambique at 10.7 percent, Zambia at 4.82 percent and Tanzania at 4.21 percent.

Meanwhile, legislators are scrutinising the proposed budget in cluster committees before discussing the fiscal plan in the plenary

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