ECAM RESPONDS TO BUDGET: IT IS OVER AMBITIOUS Featured

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While hailing Government for taking on board some of its proposals, into the 2022-2023 National Budget,  the Employers Consultative Association of Malawi (ECAM) has described the K2.840 trillion total financial plan as “overambitious considering the continued economic challenges that the country is facing emanating from the COVID-19 pandemic and the after-effects of Tropical Cyclone Ana.”

Finance Minister Sosten Gwengwe: Presented the Budget Finance Minister Sosten Gwengwe: Presented the Budget
02
March

“Slow recovery of supply chains due to Covid-19 pandemic is still negatively affecting revenue generation for the country and therefore the expected domestic revenues may not be attained.

 

“In addition, the after-effects of the Tropical Cyclone Ana will affect food security and transport networks in the country. As such, the estimated microeconomic indicators such as inflation which fuel good economic outcomes will be distorted due to food shortages and disruption of transport networks,” says the association.

 

In its statement reacting to the annual financial plan, Ecam said the high domestic debt will make the cost of borrowing high for the industry which increases production costs and also crowds out the private sector.

 

On Macroeconomic indicators the association said the budget has projected optimism on the performance of key macroeconomic indicators which include inflation rate, and policy rate.

 

“The good performance of these key macroeconomic indicators which are anticipated to be low and stable is essential to achieve wealth creation, job creation, and food security in the fiscal year as desired in the budget and aspired in the Malawi 2063 vision,” reads the statement in part.

 

On remuneration and taxes reforms, the employers body applauded Government for its continued effort to put in place measures that promote local industries “to be more competitive and cushion many from the effects of the Covid-19 pandemic”.

However, ECAM expressed concern on the revised Pay As You Earn (PAYE) brackets of 30 percent for incomes between K330, 000 to K3 million per month.


The body argued that while it is understood that the revision of tax brackets is intended to promote wealth distribution in the country and to increase disposable incomes for low-income earners but the tax imposed on the income earned between K330, 000 to K3 million will not increase disposable incomes of many Malawians because many that are employed Malawians earn below K1 million.

 

“Therefore, the revision will not cushion this category from effects of the increased cost of living in the country so to enable many working Malawians to attain a decent standard of living. Thus, Malawi will not reap the long term benefits of increased expenditure to spur productivity, and job creation that have the effect of increasing the tax base.”

 

Ecam also hailed the allocations to Ministries of Education and Health with larger proportions of 16.3 percent and 10.0 percent respectively saying it will enable the country to be on track with Malawi 2063.


The employers body also feels Government is on track in as far as job creation agenda is concern.

 

“Ecam previously proposed to government to continue and expand investments in public works as one way of creating jobs and stimulating aggregate demand for goods and services. These investments are notable in the increase in allocation of funding to transport and public works, infrastructure projects in education, health, energy sectors, and also Special Economic Zones in the industrial sector. These activities are highly recommended because many jobs will be created in the long run.”

 

“Overall government should be commended for crafting a budget that is forward looking and finely balancing it amidst many competing priorities and in the face of reduced revenues due to Covid-19 pandemic and the anticipated after effects of Tropical Cyclone Ana.” Concluded Ecam.

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