‘Tough times’ ahead, warns Malawi Finance Minister

Finance and Economic Planning Minister Goodall Gondwe has warned Malawians to brace themselves for tougher economic times ahead. [caption id="attachment_86853" align="alignright" width="452"] Gondwe: Warns Malawi 'tough times ahead'[/caption] Gondwe delivered the implicit message in Lilongwe Tuesday during a high level dialogue between Cabinet Ministers and the Civil Society Community (CSO’s) where the latter had demanded an explanation of Malawi’s economic stance. He, however, expressed optimism that the country with weather the storm of economic recession. The Finance Minister stressed the need for the country to find own resources to finance the health and education sectors as well as subsidies after IMF challenged the country to attain economic independence in a short period of time; depending on internally generated resources for expenditure. “ It is not possible to have 100 percent funding in government with donors withholding 30-40 percent of the funds. The IMF [International Monetary Fund] has advised us to be able to cover own day-to-day expenditures in two to three years. “Government is embarking on stringent reforms to cut expenditure and we will have monthly performance audits,” said Gondwe. “Production is not as high as it used to be, so we cannot expect to generate as much revenue from tax as the case was before,” said Gondwe further explaining that the low production is partly due to the unruly weather conditions that hit the country in the last growing season. Gondwe said with the right strategies which government has put in place, the country would soon regain her economic growth but called for “ stringent adjustments and reforms in our expenditure of resources.” He said Malawi will have to, among others, reprioritise government’s activities and  broadening the tax base as one way of collecting more revenue. “A number of people who are not used to paying taxes will have to start paying taxes. We cannot afford a luxurious life under the circumstances,” reasoned the minister further adding that public resources would have to be used as intended and efficiently. IMF has suspended loans to Malawi for failing to cut its wage bill and improve revenue collection, making it less likely Western donors will resume budgetary aid. Budget assistance from Western donors worth millions of dollars has been withheld for two years now —amid concerns of Cashgate, the plunder of public funds at Capital Hill— Such aid has historically accounted for about 40 percent of the national budget. Finance Minister said overnment is geared to improve business environment and the macroeconomic situation in general. Gondwe said he is “ absolutely confident” that Malawi will end up with a robust and positive growth. The IMF said Malawi’s economic growth would slow to 3 percent this year from 5 percent in 2014, reflecting a decline in the maize harvest and weak private- sector investment and consumption.