Highlights
Frequent shocks, including the recent El Nino-induced drought are negatively impacting Malawi’s economic growth. Due to these weather-related shocks, the IMF has projected a GDP growth for Malawi of 2% for 2024, which is lower than the 3.2% initially projected by the Government of Malawi. Inflationary pressures remain high – while the Government projected an annual inflation rate of 27.1% for 2024, the Reserve Bank of Malawi (RBM) has reported an overall inflation rate of 32.3% just for April 2024, an increase from the 31.8% recorded in March 2024.
The 2024/25 National Budget is estimated at MK5,99 trillion, which represents an increase of 38.6% from the 2023/24 revised budget of MK4,32 trillion. This growth in expenditure is mainly due to the increase in statutory budget lines such as wages and salaries, debt interest payments and pension and gratuities. In addition, there has been a huge increase, by 70%, in commitments from development partners towards development projects.
On the other hand, domestic revenues have grown by 40.6% from the 2023/24 revised projection of MK2.5 trillion to an estimated MK3.4 trillion in 2024/25. With a projected expenditure of MK5.9 trillion, a deficit of MK1.4 trillion (6.9% of GDP) is projected for 2024/25. A large portion of this deficit (90%) is expected to be financed through domestic borrowing.
The consistently high budget deficits over the past 5 years have significantly increased debt servicing costs – which have grown by 56.3% in 2024/25 and accounts for up to 43% of domestic revenues and 24.3% of total government expenditure (TGE) and ahead of allocations to all key social and economic sectors.
The combined allocations to key social sectors benefiting children have slightly increased from 29.3% in 2023/24 to 31.1% of TGE in 2024/25 – education (14.8%), health (9.2%), social protection (3.7%) and WASH (3.4%).
Against this background UNICEF encourages the Government to continue prioritizing social spending, including for key social protection programs to help cushion the vulnerable considering the frequent shocks and rising inflation.
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