Ecama punches holes in budget

The Economics Association of Malawi (Ecama) has punched some holes in the 2020/21 National budget presented by Finance Minister Joseph Mwanamvekha on Friday.

In its post-budget analysis, Ecama says it is not clear how a stable macroeconomic environment will be sustained amid the economic challenges envisaged in 2020/21 financial year.

“Sound macroeconomic frameworks include not only price stability which so far has been the major and consistent achievement but also a well-functioning real economy, sustainable debt and healthy public and private sector balance sheets.

“In the face of an ailing economy, debt vulnerabilities, persistently growing budget deficits, poor balance sheets, among others; it becomes unpractical to assume that the exchange rate will be anchored at K750 per dollar the fiscal year, inflation to remain in single digits at 9.9 percent and the policy rate at 13.5 percent,” Ecama says.

Among others, the economists point out a number of inconsistencies which include the fact that the anticipated 35 percent drop in tax revenue must consequently lead to a reduction in expenditure.

Ecama further notes that investments and expected results in energy sector not coming out clearly to build investor confidence.

The economists have underscored the need to strike a balance between long term investments and making energy affordable in the short term.

According to the economists, government needs to re-prioritise targeted projects and programs in order to minimise expenditure and reduce the deficit in order to get the best out of the available resources.