- Mr. Speaker, Sir, total revenues and grants as a percentage of GDP were projected at 29.9 percent in 2001/02 fiscal year. Domestic revenues were projected at 18.2 percent of GDP and overall expenditure as a percentage of GDP was projected at 31.8 percent. However, the preliminary out-turn of the budget in the 2001/2002 fiscal year was not as planned.
- Mr. Speaker, Sir, the preliminary out-turn for domestic revenue as a percentage of GDP for the fiscal year 2001/2002 is 16.7 percent, a decline of 1.5 percentage points from the projected revenue. The low domestic revenue outturn was a result of a number of factors including the exchange rate appreciation that resulted in reduced values for duty purposes, decline in petrol prices and volumes, and the food shortage that negatively affected dutiable imports.
- Mr. Speaker, Sir, the overall resource envelope was further worsened by non-disbursement of donor balance of payment support to Malawi. It was anticipated that K7.05 billion in donor balance of payments support and K3.82 billion as project grants would be disbursed. The government only received K1.56 billion for the entire fiscal year.
- Mr. Speaker, Sir, the preliminary expenditure out-turn is 32.6 percent of GDP, an increase of 0.8 percentage point from the approved budget. The slight increase over planned expenditure was a result of the non-disbursement of donor inflows and the urgent need for Government to import and distribute food to drought victims met through domestic and foreign borrowing.
- Mr. Speaker, Sir, our expenditures have not been consistent with our domestic revenues. We have not been living within our means. Increased borrowing has led to an unsustainable debt burden and high interest rates. Debt servicing in 2001/02 fiscal year, for example, is estimated at about 25 percent of the total budget for the year. Should the current borrowing level continue, it will result in an increasingly large proportion of domestic revenues going to servicing debt. The country could then run into the danger of reaching a point where all the domestic revenues are being used to service debt. Mr. Speaker, Sir, Honourable Members, this explains why as a country we need to вЂњface our realities and live within our means in our fight against povertyвЂќ.