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The Ministry of Finance says it expects to have a draft report on the on going mid-year budget review by the end of this month, but has ruled out plans for a supplementary budget.
The review is expected to help government quantify savings anticipated from recent policy reforms and assist in estimating donor aid support.
Some of the policy initiatives to be scrutinised include the implementation of the development budget by focusing on ongoing projects before beginning new ones. This move was expected to save about K1 billion or 0.75 percent of the GDP.
Government also said it would slash the travel budget by 25 percent to save about K550 million or 0.25 percent of the GDP; it moved the Presidency to Lilongwe from Blantyre and eliminated the special activities vote in the national budget.
Other measures included civil service wage reforms, repayment of domestic arrears, expenditure reports, enlarging the targeted input programme and the buying of maize to replenish the strategic grain reserves.
Secretary to the Treasury Milton Kutengule said on Tuesday ministries should not expect budget allocation increments because any additional funds unearthed by the evaluation process will be devoted to debt reduction.
Kutengule added that the ministry is likely to tighten spending ceilings if revenue and donor support are running below budget estimates so as to achieve the government’s objective of cutting domestic borrowing.
“There will be very little prospects for increased funding unless it is absolutely necessary. A supplementary budget, therefore, is not part of our plans at this moment,” said Kutengule.
Out of the K85 billion initial budget for 2004/2005, treasury planned to source K52 billion locally while donors pledged K25.2 billion.
This left a budget deficit of about K8.4 billion which was expected to come from domestic borrowing.
Since Parliament later raised the budget to K89 billion during the same budget sitting without stating the source of the extra money, analysts assumed it would also come from the debt market and questioned government’s commitment to reduce the domestic debt.
Government planned to spend K66 billion or 30.7 percent of GDP on the recurrent account, out of which K20 billion (30 percent of the recurrent account) was scheduled for debt repayments.
In September last year, the International Monetary Fund (IMF) warned the Malawi government not to use the review as an excuse for bloating spending limits.
The Fund said doing so would be a risk to the success of the staff monitored programme which could enable Malawi to get a new poverty reduction and growth facility arrangement from the IMF. The Fund has since indicated that it is impressed with Malawi.
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