Halfway through the 2024-2025 national budget of 5.99 trillion kina, sharp gaps have emerged between government projections and actual performance, raising concerns about the future implementation of the budget plan.

While presenting the budget statement on February 23 this year, Minister of Finance and Economic Affairs Simplex Chithyola Banda presented an optimistic financial plan, predicting that inflation would moderate to 23.4 percent and that the rate growth in real gross domestic product (GDP) would reach 3.2 percent.

Six months after the budget was presented, the actual figures reveal a different picture. Inflation rose to 34.3 percent in September this year, according to the National Statistics Office, while the Reserve Bank of Malawi revised down its growth forecast to 2.3 percent, citing the impact of El Nino-induced climate volatility.

The International Monetary Fund (IMF) and the World Bank are also less optimistic. The IMF projects a growth rate of 2 percent while the World Bank projects a growth rate of 1.5 percent, indicating possible further economic stagnation.

Treasury officials were not immediately available to comment on developments in the budget more than six months after it was presented to Parliament.

But economists Bertha Bangara-Chikadza and Velli Nyirongo suggest that while external factors may have influenced the projections, the situation raises questions about government policy and the effectiveness of its execution.

Bangara-Chikadza, acting president of the Economic Association of Malawi, warned that the gap between government projections and economic reality could jeopardize the implementation of the national budget.

“Reliance on external financing and rising debt servicing costs are growing concerns if current economic stresses persist,” she said.

To correct the situation, Bangara-Chikadza, who teaches economics at the University of Malawi, urged the government to prioritize efficient tax collection, reduce borrowing, stabilize food prices food, adjust subsidies and increase spending in high-growth sectors such as tourism.

For his part, Nyirongo, a Malawian economist based in Scotland, warned that lower-than-expected GDP growth could lead to reduced tax revenues, forcing the government to increase borrowing to meet its commitments.

He said: “This not only increases public debt, but also increases vulnerability to external shocks and financial instability.

“Rising debt service costs are straining budgetary resources and could crowd out public investment in critical sectors. »

Nyirongo advised the government to realign its spending priorities to ensure that scarce resources are channeled to high-impact areas.

For the 2024/25 financial year, total revenue and subsidies are estimated at 4.55 trillion kin, or 24.3 percent of GDP, while domestic revenue is estimated at 3.38 trillion kin, or 18.1 percent. of GDP.

Of this amount, tax revenues are estimated at 3,260 billion kina.

In the current budget, the budget deficit is estimated at 1.43 trillion kina, or 7.6% of GDP.

The deficit is expected to be financed by domestic borrowing amounting to 1.28 trillion kina and foreign borrowing of 150 billion kina.