By Mercy Matonga, Kingsley Jassi & Daniel Zimba:
Finance Minister Simplex Chithyola Banda is expected to present the 2025-26 national budget today, amid growing pressure from stakeholders due to the escalating cost of living.
The economic crisis, worsened by dwindling foreign exchange (forex) reserves, has made imports and goods produced using imported raw materials unaffordable for many consumers.
This has caused widespread discomfort, with consumers uncertain about prices from one day to the next.
Following Tuesday’s demonstrations by second-hand clothes sellers in Lilongwe over the rising cost of bales, their counterparts in Blantyre also took to the streets Thursday.
By press time Thursday, it was reported that traders in Zomba City were also planning protests for today.
Chithyola Banda will need to navigate these numerous challenges and announce a new economic direction to recover the struggling economy, according to observers.
This will be the final budget for the current Malawi Congress Party-led administration ahead of the General Elections on September 16.
Malawi Economic Justice Network Executive Director Bertha Phiri has called for measures to stabilise inflation, including effective monetary policies, diversifying imports to alleviate foreign exchange shortages and strengthening local production to reduce reliance on imports.
Phiri further urged prudent fiscal management, including controlling excessive expenditure, improving revenue collection and ensuring efficient budget execution.
“Establishing a clear debt management strategy that prioritises concessional borrowing, timely debt servicing and transparent public debt reporting is essential to prevent fiscal strain and future economic instability,” she said.
With inflation rising and revenue performance low, pressure continues to mount from all directions, prompting experts and development partners to advocate for stringent measures in the upcoming fiscal policy.
Organisations such as the Economics Association of Malawi and the World Bank have called for a budget that aims to reverse the borrowing trend to reduce public debt.
They have also emphasised the need to curb leakages, save public resources and prioritise spending on critical areas and high-yielding investments.
The upcoming budget will follow the 2024-25 national budget, which faced difficulties at the half-year mark as the initial K5.99 trillion expenditure plan missed several key targets, including revenue, expenditure, growth rate and inflation.
At that time, fiscal pressure also mounted, largely due to donor fatigue, as expected inflows were more than 60 percent below target at the half-year mark.
For 2025-26, the recent pause in international aid by the United States, one of Malawi’s largest foreign development partners, introduces a new dynamic to the country’s development and social protection spending.
Analysts expect this to exert additional pressure on the budget.
For 2024-25, the latest Malawi Economic Monitor by the World Bank notes that underperformance in revenue affected overall budget implementation at the half-year mark.
“At K2.677 trillion, overall spending was 14.2 percent below the mid-year target of K3.2 billion, partly due to the backloading of expenditures.
“For example, fertiliser payments were shifted from the first half to the second half of the fiscal year,” the report says.
The Human Rights Defenders Coalition (HRDC) and the National Advocacy Platform (Nap) have since indicated that they expect a budget that “responds to the needs of Malawians”.
A statement signed by HRDC Chairperson Gift Trapence and Nap Chairperson Benedicto Kondowe says Malawi is grappling with skyrocketing inflation and the escalating cost of living.
They implore the government to take bolder steps in stabilising the economy.
“While the President’s proposed measures to curb inflation are a step in the right direction, they must be reinforced with concrete policy actions to ease economic pressure on struggling households.
“Additionally, sustained fuel availability remains crucial for economic stability and we call for long-term strategies to prevent recurrent shortages,” the two have said.
They add that Chithyola Banda has demonstrated what they call a commendable willingness to listen and craft a budget that responds to the pressing needs of Malawians.
“In the face of deep economic challenges, he requires the collective support of all stakeholders to fulfil this critical mandate,” the statement says.
Meanwhile, in their petition, which they sought to deliver to Blantyre District Council yesterday, protesting traders in Blantyre said the “situation is getting worse, with prices increasing almost daily”.
The earlier protests in Lilongwe concluded with resolutions to provide wholesalers of second-hand clothes with forex to help reduce their prices.
Commenting on the protests, social commentator Victor Chipofya advised the government to schedule proper dialogue with vendors while addressing the economic challenges facing the country.
“The people are justified in their demonstrations because the situation is becoming unbearable. The government should find a way to have a discussion with the people, rather than dismissing them,” Chipofya said.
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