Government has recorded a deficit of K102.7 billion during the second quarter of the fiscal year 2019/2020 which is considerably higher than 58.8 billion it recorded in the previous quarter, it has been established.
This is according to the recent economic report for 2019 last quarter released by the Reserve Bank of Malawi recently.
Revenues totalled K335.6 billion while expenditures amounted to K438.2 billion with the deficit being financed by both domestic and external resources according to the report.
“Central government budgetary operations closed with a deficit of K102.7 billion (1.7 percent of GDP) for the last quarter of 2019 from a deficit of K58.8 billion (1.0 percent of GDP) and K96.4 billion (1.7 percent of GDP) recorded in the previous quarter and corresponding quarter of 2018 (annex table 3.1),” reads the report.
Total revenue collections registered an increase of K40.9 billion in the quarter under review from K294.6 billion that was recorded in the previous quarter, and compared to K274.5 billion collected in the fourth quarter of 2018 attributable to an increase in both domestic revenue collections and foreign receipts.
Domestic revenue collections rose by K8.6 billion to K293.3 billion in the period under review. Of this, tax revenue collections improved by K7.7 billion to K280.7 billion, while non-tax revenues registered an increase of K809.0 million to K12.6 billion.
Similarly, foreign receipts surged by K32.4 billion to K42.2 billion in the fourth quarter of 2019.
On the expenditure side however, government overspent by K84.8 billion to K438.2 billion compared to K370.9 billion in corresponding quarter of 2018 emanating from both recurrent and development expenditure components.
“Recurrent expenditures rose by K28.9 billion to K350.1 billion, of which wages and salaries increased by K27.7 billion, following salary increments and arrears that were paid in the quarter. Development expenditures recorded a significant increase of K55.9 billion to K88.1 billion on account of increased disbursements on projects funded by foreign development.” Said the report.
This means government has so far recorded about k160 billion budget deficit six months in the 2019/2020 fiscal year exceeding the total projected annual deficit of k155 billion.
Earlier experts cautioned the treasury to exercise prudency in its expenditure because any deficit fuels a surge in domestic borrowing which has the bearing on interest rates on top of its potential to affects the private sector’s access to credit.
