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Wednesday, July 02, 2008

Govt still optimistic of 7.5% economic growth

The Daily Times - Malawi’s Premier Daily

19:53:19 - 02 July 2008

MALAWI’S economy would still grow by 7.5 percent in 2008 despite the political stalemate that has stalled budget discussions, Minister of Economic Planning Ken Lipenga has said.
But some economic analysts have warned continued delays to pass the national financial plan would have a devastating impact on the production of goods and services.
In an interview Tuesday Lipenga said there are several consequences that would come due to the budget delay, the major one being reduced economic growth and activities.

“This delay is bound to reduce our economic growth estimates as it would hold up the resources that the national budget pumps into the economy.

However as a responsible government we are trying to enlighten our colleagues in the opposition to approve the budget to minimise long term effects on the economy,” said Lipenga.

During the budget statement delivered in parliament last month Minister of Finance Goodall Gondwe said this year economic growth was estimated at 7.5 percent.

But Malawi Economic Justice Network (Mejn) said the estimates could not be achieved if parliament continues to delay approving the national budget which is expected to pump in funds in the economy to stimulate production intended for growth.

Mejn Executive Director Andrew Kumbatira said if the current political impasse continues it would lead to reduced economic growth and dent the country’s image to the international community.

“The Minister of Finance cannot spend without approval from parliament and we are in July already the political tension might bring several complications one of them being low economic growth rate than estimated.

“We should understand that 46 percent of this year’s budget is being supported by donors and the unavailability of the budget during the intended time brings challenges to the donor community who have made pledges to provide funding,” said Kumbatira.

But Chief Executive Officer for Society of Accountants in Malawi (Socam) Daniel Dunga said there would be no need to worry on the economic growth estimates if the finance minister is allowed to spend for four months.

“The 7.5 percent economic growth cannot be affected for these four months but it would be worrisome if some of the things in the budget are delayed to be implemented.

If the actual budget is not in place after four months then we should worry as a nation,” said Dunga.

Malawi Confederation of Chambers of Commerce and Industry (MCCCI) president Harrison Kalua said the estimated economic growth could be affected depending on how government prioritises its expenditure within the next four months.

“If the budget is not approved after four months then it would be a problem and it could heavily affect our growth estimates and on the other hand donors would start worrying if the status quo remains for the next two months,” said Kalua.

He added that the current political scenario is part of democracy which is not cheap as it requires several checks and balances involved by all parties.

“Democracy is not cheap and this (political situation) is part of a democratic exercise and it comes with a cost we should not complain much but seek for better ways to resolve it because that what we voted for in 1993,” said Kalua.

July 1 in Malawi’s fiscal calendar marks the beginning of government’s fiscal year and Section 178 of the constitution mandates the Finance Minister to ask parliament for provisional expenditure from the Consolidated Fund if parliament fails to pass the national budget by this day.

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