Parliamentary Budget Committee Pessimistic With Malawi Projected GDP Growth Of 5.1 Percent

Chiphiko: Nation needs to pray 5 times a day to achieve such ambitious rate of growth

The Parliamentary Committee on Budget says nothing tangible for this year’s Budget to make the Malawi economy register real GDP growth rate from 3.1 to 5.1 percent.

Chairperson for the Committee, Rhino Chiphiko finished presenting the Committee's findings on Tuesday in the National Assembly, a response to Minister of Finance Goodall Gondwe's recently presented K1.136 trillion national budget estimates in the National Assembly for the 2016/17 financial year.

Parliamentary Budget Committee Chairperson, Rhino Chiphiko says his Committee established that the only positive areas in the budget has been large allocation to the Ministry of Agriculture which represent 17 percent of the total national budget and allocation for the food purchase.

The committee further noted the proposals to reform the Farm Input Subsidy Program and plans in Public Finance Management.

However, the Budget committee found number of worrying developments in the Budget which led the Committee to conclude that Malawi will fail to achieve real growth.

"Mr. Speaker Sir, events in the natural, or, Act of God, and in the human realm portend a difficult future. Climate change and extreme adverse weather events, unstable exchange rate, persistent high inflation, high interest rates and constrained fiscus, all portend a sluggish and depressed economy. An economy is in an Intensive Care Unit (ICU) like a patient on a Life Supporting Machine. Malawi is in an economic crisis." emphasised Chiphiko with urge that "But we must do something" mentioning lowering of interest rates and boost industrial production.

In the Committee findings presentation, performance of many sectors in the Malawi will be adversely affected by poor performance of the Agriculture sector as it is apparent that climate is still affecting the sector yet Malawi continues to depend on the sector.

According to Chiphiko, later in an interview said Malawi may this year register a negative 2.5 growth rate and not surpass the average growth in the regional which is around 3 percent. He said the committee believes that Ministers projected growth figure will need the nation "to pray more than 5 times a day in order to achieve such ambitious rate of growth."

Chiphiko said the budget has large allocation on expenditure for the public debt charges and interest repayment and that this will make Malawi fail to meet Millennium Development Goals as less has been allocated to the Development programmes.

His committee further notes that interest rates in banks remains stubbornly high making lives of many to be unbearable in the year which 8 million Malawians will face food shortage.

The Committee emphasise that interests rates must be revised downwards to make people able to borrow from banks and able to repay loans at reasonable rates. 

The Committee has among others noted that number of tax proposals cannot lead to any economic recovery and may even push the economy deeper into recession.