Figures from the Reserve Bank of Malawi (RBM) show that the first half (H1) of this fiscal year, Treasury has posted a deficit of K165.7 billion, which is 5% of gross domestic product (GDP).

The above also means that Treasury surpassed this fiscal year’s deficit target of K155.9 billion or 2.5 percent by K9.8 billion. The development may not be news, as the African Development Bank (AfDB) has outlined in its African Economic Outlook 2020, that Treasury’s plan to reduce the fiscal deficit to 2.5% of gross domestic product (GDP) this fiscal year, is unrealistic.

In the 2019/20 National Budget, the overall deficit was projected to be 2.5% of GDP. However, AfDB acknowledges that economic growth could be reinforced by continuing macroeconomic stability. maintaining accommodative policy could propel capital flows, increase economic activity and restore growth since it supports credit to the private sector.