Minister of Finance and Economic Planning has told National Assembly that this 2016-2017 Financial Year Government will spent a total amount of K1, 136.4 billion (One Trillion, One Hundred and Thirty Six Billion point Four)
This total expenditure and net lending during this year represents 26.1 percent of nominal GDP.
It also represents an increase of 23.9 percent over the 2015-2016 revised expenditure of K902.3 billion.
Among others this budget will allocate K198.5 Billion to the Ministry of Agriculture, which is the highest allocation of resources for this year, and K147.6 Billion for Ministry of Education and K9.8 Billion for the Ministry of Health.
This large allocation to Agriculture comes at a time when the Government has resolved to intensify irrigation farming in order to transform the economy from the excessive dependence on rain-fed agriculture, as a lasting solution to the challenge of climate change.
"The move will also increase the number of harvests per year to more than the current single harvest. This could substantially increase the country’s rate of economic growth." indicated Gondwe
He mentioned that the large scale farming will be intensified through Green Belt Initiative and that Government has decided to formally establish the Greenbelt Authority (GBA) as a stand-alone public agency.
"The authority will be the official agent for the construction of these largescale irrigation infrastructural projects throughout the country in line with the Government’s Irrigation Masterplan, while small-scale irrigation projects will continue to be implemented by the Ministry of Agriculture, Irrigation and Water Development." He said
"Accordingly, the Treasury has established Vote 078 to allocate resources for the administrative and operational expenses of the authority with immediate effect. This will be part of the 2016/17 budget. The large-scale irrigation infrastructure projects will be part of the Government’s development programme." He assured
Of the projected K1.136 trillion, recurrent expenditure will be MK815.5 billion or 18.7 percent of GDP, which is higher than the 2015/16 allocation by 16.8 percent.
According to Gondwe, the Development expenditure will increase by 57.0 percent from MK217.5 billion to MK317.4 billion, or 7.3 percent of GDP.
"Up to K279.8 billion or 82.2 percent of the development budget will be provided by development partners through loans and grants, while local resources will account for the balance of K37.6 billion or 11.8 percent. Therefore, the donor contribution to the development programme is anticipated to increase by 62.0 percent relative to 2015/16." He said
Gondwe mentioned that three key factors and priorities were taken into account when preparing the 2016-2017 budget.
He named the key considerations as putting reflection of agreement between Government and IMF within the context of seventh and eighth reviews of Extended Credit Facility arrangement; assumptions that macroeconomic outlook for the next financial year, where the real GDP growth is projected at 5.1 percent while nominal GDP will grow by 24.0 percent and that the average inflation rate in 2016/17 is projected reach 17.4
The other key consideration was that based on the Government’s short and medium-term policy priorities which are motivated by the objective of ensuring that the country maintains a program with the IMF, while addressing some pressing socio-economic challenges.
On maintaining IMF programme and addressing socio-economic problems, Gondwe therefore indicated that the budget seeks to increase domestic resource mobilization; make available adequate resources for maize procurement, and to support irrigation farming; to ensure that the wage bill is maintained below 7 percent of nominal GDP; and to ensure that resource allocations to the health, education and other critical social sectors remain adequate and a significant proportion of the budget.
"The move will also increase the number of harvests per year to more than the current single harvest. This could substantially increase the country’s rate of economic growth." indicated Gondwe
He mentioned that the large scale farming will be intensified through Green Belt Initiative and that Government has decided to formally establish the Greenbelt Authority (GBA) as a stand-alone public agency.
"The authority will be the official agent for the construction of these largescale irrigation infrastructural projects throughout the country in line with the Government’s Irrigation Masterplan, while small-scale irrigation projects will continue to be implemented by the Ministry of Agriculture, Irrigation and Water Development." He said
"Accordingly, the Treasury has established Vote 078 to allocate resources for the administrative and operational expenses of the authority with immediate effect. This will be part of the 2016/17 budget. The large-scale irrigation infrastructure projects will be part of the Government’s development programme." He assured
Of the projected K1.136 trillion, recurrent expenditure will be MK815.5 billion or 18.7 percent of GDP, which is higher than the 2015/16 allocation by 16.8 percent.
According to Gondwe, the Development expenditure will increase by 57.0 percent from MK217.5 billion to MK317.4 billion, or 7.3 percent of GDP.
"Up to K279.8 billion or 82.2 percent of the development budget will be provided by development partners through loans and grants, while local resources will account for the balance of K37.6 billion or 11.8 percent. Therefore, the donor contribution to the development programme is anticipated to increase by 62.0 percent relative to 2015/16." He said
The total revenue and grants during the 2016/17 fiscal year are estimated at K965.2 billion or 22.2 percent of nominal GDP.
Of this amount, some K708.8billion will be tax revenue, K66.0 billion will be non-tax revenue, while K190.4billion will be grants from Malawi's cooperating partners.
"Thus, MK774.8 billion or 80.3 percent of these resources will be domestically generated, while the remaining 19.7 percent will represent donor grants. " he said the Finance Minister
He went on "Compared with the 2015/16 revised budget, tax revenues are projected to increase by 21.8 percent, reflecting the fact that nominal GDP, which is the base for most of the taxes, will grow by 24.0 percent. Tax on income and profits will account for 55.4 percent of total tax revenue, while tax on goods and services will generate 37.2 percent." He said but noted that non-tax revenue is shown to be lower relative to the 2015/16 revised budget estimate of K71.9 billion.
Of this amount, some K708.8billion will be tax revenue, K66.0 billion will be non-tax revenue, while K190.4billion will be grants from Malawi's cooperating partners.
"Thus, MK774.8 billion or 80.3 percent of these resources will be domestically generated, while the remaining 19.7 percent will represent donor grants. " he said the Finance Minister
He went on "Compared with the 2015/16 revised budget, tax revenues are projected to increase by 21.8 percent, reflecting the fact that nominal GDP, which is the base for most of the taxes, will grow by 24.0 percent. Tax on income and profits will account for 55.4 percent of total tax revenue, while tax on goods and services will generate 37.2 percent." He said but noted that non-tax revenue is shown to be lower relative to the 2015/16 revised budget estimate of K71.9 billion.
Gondwe mentioned that three key factors and priorities were taken into account when preparing the 2016-2017 budget.
He named the key considerations as putting reflection of agreement between Government and IMF within the context of seventh and eighth reviews of Extended Credit Facility arrangement; assumptions that macroeconomic outlook for the next financial year, where the real GDP growth is projected at 5.1 percent while nominal GDP will grow by 24.0 percent and that the average inflation rate in 2016/17 is projected reach 17.4
The other key consideration was that based on the Government’s short and medium-term policy priorities which are motivated by the objective of ensuring that the country maintains a program with the IMF, while addressing some pressing socio-economic challenges.
On maintaining IMF programme and addressing socio-economic problems, Gondwe therefore indicated that the budget seeks to increase domestic resource mobilization; make available adequate resources for maize procurement, and to support irrigation farming; to ensure that the wage bill is maintained below 7 percent of nominal GDP; and to ensure that resource allocations to the health, education and other critical social sectors remain adequate and a significant proportion of the budget.
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