Finance Minister Joseph Mwanamvekha has warned that Malawi’s economy could be headed towards a recession unless the current coronavirus-induced headwinds rescind before the end of the year.
Presenting a K2.2 trillion (about US$2.9 billion) national budget for 2020/21 in parliament on Friday, Mwanamvekha said the performance of the economy has been hamstrung by the restrictions imposed by the coronavirus pandemic that has brought most of the global economy to a standstill.
“The 2019-2020 budget faced implementation challenges as monthly revenue collection reduced from K90.8 billion to 59.1 billion, a representing a drop by 35 percent,” the minister said.
This saw the budget deficit for the 2019/20 financial year widening to K632 billion or 10 percent of gross domestic product from the shortfall of K320 billion recorded in the previous year.
In addition to the missed revenue collection target, Mwanamvekha also blamed the widening budget deficit on “increased expenditure on security due to post-election demonstrations (and) fresh elections.”
He said the declining revenue collection is expected to drag the country’s economic growth forecast to minus 3.8 percent this year unless there is a significant improvement in the operating environment, including an end to the coronavirus pandemic before December 2020.
JN/APA