Malawi has once again trimmed the development budget during the Mid-Year Budget Review, the third time in four years, raising alarm over the country’s growth prospects. Ministry of Finance, Economic Planning and Decentralisation trimmed this year’s allocation from K1.77 trillion to K1.58 trillion amid slow donor disbursements and delays. In the previous financial year (2024/25), development expenditure was slashed to K1.58 trillion from the approved K1.77 trillion due to contractual bottlenecks.
In the 2023/24 financial year, development expenditure was increased from an approved provision of K831 billion to MK1.08 trillion on account of an increase in both foreign financed projects and domestically financed projects due to the exchange rate correction and expected disbursements following the approval of an International Monetary Fund (IMF) programme. However, in the 2022/23 financial year, development expenditure was also cut by K189.3 billion from the approved K818.9 billion to K629.6 billion. In an interview on Tuesday, Mzuzu-based economist Christopher Mbukwa said this could threaten infrastructure, jobs and Malawi’s push toward middle-income status under Malawi 2063 (MW2063), the country’s long-term development plan.
He observed that cutting development spending will affect the establishment of the much needed infrastructure in energy, agriculture and human capital, which is needed for growth to take place. Mbukwa, who teaches at Mzuzu University, said: “Furthermore, cutting development budget also leads to low productivity, limits jobs creation and private sector growth. “Ultimately, foundations upon which Malawi can use for wealth creation as purported in the Malawi 2063 cannot be realised.” Already, Malawi’s quest to align its national budget with MW2063 is facing significant hurdles, with a United Nations (UN) analysis revealing glaring discrepancies between the fiscal plan and the MW2063 First 10-Year Implementation Plan (MIP-1).
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This misalignment raises concerns about the country’s ability to meet its developmental targets, particularly those outlined in MIP-1, which focuses on critical areas such as commercialised agriculture, manufacturing and industrialisation. Published UN data show that the top three spending priorities to achieve MIP-1 objectives as modelled by the National Planning Commission (NPC) are economic infrastructure at 35 percent, agricultural productivity and commercialisation at 18 percent and human capital development at 11 percent. Yet, the 2025/26 National Budget allocated the highest share to effective governance systems and institutions at 45 percent against the MIP-1 recommendation of eight percent followed by human capital development at 30 percent against the recommended 11 percent and agricultural productivity and commercialisation at nine percent against the recommended 17.6 percent. Consequently, MIP-1 has reported a progress of 43 percent progress.
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