Budget assumptions unrealistic –MCCCI

Industry captains are describing the underlying assumptions of the proposed budget as unrealistic and that they should be reviewed.

The 2024-2025 budget was formulated on the assumptions that the economy will grow 3.6 percent and inflation will average 23.4 percent among others.

“I would like to assure my fellow Malawians that our economy is getting back on track recovering from the economic and climate related shocks that the country experienced,” Finance minister Simplex Chithyola said.

But in its response, the Malawi Confederations of Chambers of Commerce and Industry (MCCCI) believes the assumptions are unrealistic and over ambitious.

According to MCCCI, the assumptions are surprisingly higher than the projections of Reserve bank, International Monetary Fund and World Bank who are forecasting 3.2 percent.

The chamber is also fearing that the dry spells might affect agricultural production hence impacting on the GDP growth rate.

Meanwhile, the confederation is also sceptical of annual inflation assumption which is contrary to current inflationary pressures.

It follows observation that domestic pressures remain high suggesting that even though food inflation is deemed transitory cyclone lagged effects continue to exert pressure on food inflation.

“El Nino weather has downplayed expectations from agricultural production for 2024, which might lead to a shortage of food supply on the domestic market and agricultural exports.

“Lagged effects of the devaluation of the Malawi kwacha by more than half in 2023 also add to the inflation risks in 2024.

“The Confederation is of the view that the current inflation assumption ought to be revised upward to match the situation on the ground,” reads the statement in part.

Last year, inflation averaged 28.8 percent –significantly higher than the initial assumption.