Malawians here at home and across the globe have touted the maiden budget by Finance Minister Sosten Gwengwe terming it pro-poor and responsive to people needs, Malawi Gazette understands.
The main areas of excitement in the budget have been the removal of value added tax (VAT) on water and cooking oil, two commodities that have been a cause of concern within the cost of living matrix for many Malawians.
Amidst the rising costs of the commodities, mainly cooking oil, manufacturers have been pushing the blame on VAT and cost of raw materials.
Random interviews by this publication after Gwengwe’s budget presentation show that there is high expectation among Malawians for manufacturers to quickly respond to this development and reduce prices of the commodity forthwith.
The finance minister too emphasized his belief that the gesture will have a direct impact on cooking oil prices. He asked cooking oil manufacturers to follow suit.
On the removal of VAT on tap water the finance minister says the move is aimed at ensuring that potable water is accessible to all Malawians at affordable rates. This comes at a time most towns in the country are implementing tap water projects for communities as is the case with Mangochi, Chitipa, Karonga, Mzimba and Nkhatabay among others.
According to the Finance Minister, the K2.84 Trillion budget tilts towards the country’s newly adopted development blueprint, Vision Malawi2063, which seeks to turn the country into a low middle income economy by 2030 and an upper middle income economy by 2063.
For this reason, Gwengwe has coined the 2022/23 budget around a thematic thrust “Accelerating implementation towards wealth creation, job creation and food security.”
The budget has also introduced historic interventions in the promotion of girl child education with removal of excise duty on sanitary pads.
“In the spirit of promoting girl child education, government has listened to the contributions that came from various stakeholders and has consequently removed duty and excise tax on sanitary pads as one way of supporting general feminine hygiene,” said Gwengwe.
This will encourage many girls to stay in school at all times as they can now afford sanitary items during their menstrual term.
The budget has also responded positively towards President Chakwera’s vision of turning Malawi into a green economy that will rely on clean energy and green investments to create jobs and wealth.
In that vein, government has removed import duty and excise tax on solar lamps and solar fridges to support the use of alternative sources of energy as well as helping rural masses that are off the national grid.
Other key takeaways from the budget is the allocation on Affordable Input Program (AIP) which has been slashed to K109.58 from K142 billion last year. To make AIP more efficient, government has also decided to cut out middlemen in the purchase of fertilizer, a commodity that constitutes a larger chunk of the program.
Gwengwe also announced government’s decision to reduce withholding on sales of tobacco bales at auction market from 3 percent to 1 percent as final tax. This will help tobacco farmers earn more from their crop and give them enough disposable income to transform their livelihoods.
Education sector has received the largest share at K462.2 billion, seconded by Agriculture sector at K477 billion while the Health sector gets K283.5 billion.
The budget has an estimated deficit of K820 billion, which is an equivalent of 7.2 percent of GDP. The deficit reflects an increase from the K825 billion gap estimated in the expiring budget.
Interestingly, the praise for this year’s budget has come from unfamiliar territories. Activist Bon Kalindo who has been leading nationwide protests to force government to manage the cost of living has since commended the Chakwera administration for listening to voices of common people.