Expert tips Government on fixing economy

Economic Analyst, Professor Ben Kalua has called on government to minimize its spending on non priority areas if the country is to tackle the current fiscal challenges.

This comes a week after the World Bank stated that high levels of Malawi’s expenditure related to resources in tackling public debt still remains a major fiscal challenge.

Currently public sector expenditure is amounting to more than 35% of Gross Domestic Product.

Kalua said arrears owed by Government to the private sector are one of the major concerns.

“Government owed arrears to the private sector is disrupting the sectors performance and the country’s economic development,” said Kalua, a Chancellor College based economist.

He added that government must moderate its spending on public services.

“Whilst there is a lot of pressure in poor countries to spend more on social services only priority areas must be considered.”

Kalua said: “Inclusion of non priority items in the budget must be replaced with necessary activities such as infrastructure investment to boost revenue.”

He said that revenue mobilization through widening of the tax base must not be heavily relied on.

“Best way is to be careful on what we spend on, whilst government has widened the tax base, this has its optimal level which when exceed may lead to defaults in payments,” he elaborated.

 As of the second quarter of this year Malawi witnessed its public debt rising to K 2.195 trillion representing 47% of the Gross Domestic Product as of 31st of June 2017.

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