Malawi Government announces K3.87 trillion budget for 2023/24 fiscal year

Malawi - Malawi’s Finance Minister, Sosten Gwengwe, on Thursday announced a national budget of K3.87 trillion for the 2023–24 fiscal year, with an overall deficit of K1.32 trillion.

To address the deficit, the government plans to borrow K1.19 trillion from domestic front and the rest from foreign sources, according to the minister.

During the presentation of the 2023–24 national budget, the Finance Minister also revealed that Malawi's debt stands at K7.9 trillion as of December 2022.

Out of that, K4.43 trillion is domestic debt, while K3.47 trillion is external debt.

The minister acknowledged the challenges posed by high levels of public debt but stressed that the government is committed to ensuring that the debt remains sustainable.

He added that the government is working to improve revenue collection and reduce expenditure to address the debt challenge.

The Education and Skills Development sector will receive K603.36 billion, with plans to construct six schools of excellence during the financial year.

The agricultural sector has been allocated K455.1 billion for wages and salaries, as well as the Agriculture Input Program (AIP) and other projects, with K117 billion specifically allocated towards AIP.

The health sector will receive K330.18 billion, which will be used for the construction of a cancer centre and 55 health posts, among other things.

To encourage the production of electric vehicles, the government will incentivize the importation of materials used for their production in Malawi and remove taxes on the importation of electric motor vehicles and electric vehicle charging equipment.

In addition, to solve the problem relating to duty for second-hand motor vehicles, where importers have complained of the value of their vehicles being questioned and consequently increased by MRA staff, thereby paying more tax than they had projected, Gwengwe says the government will introduce a spreadsheet for vehicles manufactured between the years 2000 and 2020, indicating the taxes to be paid.

The government will also introduce an 8 percent salary increment and a transport allowance for civil servants.

In addition, the honoraria of all chiefs on the payroll will be doubled, and Paramount chiefs will be allowed to import at least one vehicle duty-free.

K8.9 billion has been set aside for the recruitment of primary school teachers, while K986 billion is expected to be spent on interest repayment on government debt.

The energy, industry, and tourism sectors will receive K51.83 billion for wages and salaries, as well as energy projects such as the Mpatamanga Hydroelectric Power Project, while the Ministry of Trade will receive K1 billion to coordinate anti-smuggling efforts.

K488 billion has been allocated to local councils, with K19.3 billion earmarked for the Constituency Development Fund.

The funds will be used for recurrent and development budgets, including the establishment of mineral laboratories to ensure that testing of minerals is done in Malawi.

Meanwhile, Malawi's government has allocated K45.9 billion to the Malawi Electoral Commission (MEC) for preparations ahead of the 2025 elections.

According to Gwengwe, the funds allocated to the MEC will help ensure a smooth preparation process for the elections.

He added that the elections cannot be financed with funds from one financial year, hence the need to start making allocations now.

The Finance Minister expressed his gratitude to various Ministries, Departments and Agencies (MDAs), private sector, Non-Governmental Organizations, academia, professional bodies, Development Partners and the public at large for their support and valuable contributions during the pre-Budget consultations.

Some of the contributions were taken on board, while others will be considered in subsequent budgets, the minister said.