By Wezzie Gausi:
The Reserve Bank Quarterly review indicates that the Malawian government’s revenue increased significantly in the first quarter of 2024, driven by a rise in tax revenue collection and a surge in grant funding.
Tax revenue collection increased by K224.2 billion to K624.1 billion in the first quarter of 2024, from K400.7 billion in the fourth quarter of 2023.
This increase is attributed to a rise in most tax categories, particularly Pay As You Earn (Paye), Corporate Tax, Provisional Tax, and Value Added Tax (VAT).
The review also shows that non-tax revenue increased by K8.6 billion to K25.4 billion in the first quarter of 2024, from K16.8 billion in the fourth quarter of 2023.
“Grant funding received by the Malawi Government increased significantly to K507.3 billion in the first quarter of 2024, from K40.1 billion in the fourth quarter of 2023. This substantial rise in grant funding is likely due to one-off grants,” the review reads.
Economist Marvin Banda said Malawi’s domestic revenue base has for the past three decades been predominantly tax based with its composition reaching over 92 percent as the annual average of total domestic revenues leaving the meagre remainder as non-tax revenues which is acceptable for a nation aiming at attaining middle-income status.
He said the grant allocations received has helped bolster total revenues, however it is worthy of note that a vast majority have been for mitigating shocks to the economy.
“Other grants have been allocated to foster economic development in tandem with potential international partnerships that if taken advantage of, would be beneficial to the nation.
“This leads to the question of efficiency of capital expenditure. It therefore falls upon the government to capitalise on the recent flurry of grant-capital inflows,” Banda said.
However, Banda said it is important to note that the significant increase in grants is likely due to one-off grants and may not be sustainable in the long term.
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